1l|:iii:|iiiS:;:i:: 



WITH 

LIFE 



AGENTS 



Ipii THE SPECIMOR CQiVffiANY 







Class i/U ::6 / r) 
Book -A:A 



Copyright ]^'^_ 



-> ■ r\: 



CDEaUGHT DEPOSm 



REVISED EDITION, m? 

TALKS 

WITH 

LIFE INSURANCE AGENTS 

BY 

THE LATE 

Henry 'Worthington jSmith, A»M., LL^B. 

MEMBER OF THE ACTUARIAL SOCIETY OF AMERICA 

PRICE: 

Cloth .... $1.50 
Leather . . . 52.00 



I917 

THE SPECTATOR COMPANY 

Chicago Office: 135 William Street 

Insurance Exchange NEW YORK 






Copyright, 1916, by 

TH^ SPECTATOR COMPANY 

New York 




JAN -5 1917 



)CI.A453546 




PREFACE. 

Every man who aspires to represent a life insurance 
v:ompany as agent should be taught the elements of the 
profession. In times past this work has occupied much 
of the attention of the manager. The purpose of this 
volume is to relieve these officers of a portion of this 
burden by placing before the newly appointed solicitor a 
clear statement of the principles and facts of the answers. 
The endeavor has been to indicate the nature of the 
policy contract, including special features, such as cash 
and paid-up surrender values, etc. A consensus of the 
opinions of successful agents in regard to the best methods 
of establishing and conducting a profitable and successful 
agency is given. Recognizing the fact that both the 
insured and those proposing to insure seek full and ex- 
plicit information in respect to the law of probabilities in 
its application to the facts upon which life insurance is 
based, it has been thought best to show, by arithmetical 
illustrations, the arithmetical processes by which annui- 
ties, premiums, reserves, costs of insurance upon the 
various forms of insurance most in use are computed. A 



IV TALKS WITH LIFE INSURANCE AGENTS. 

full explanation of the contribution plan of apportioning 
surplus is also placed before the reader. Those who 
seek to be well-informed agents should not only compre- 
hend this portion of this work, but should also continue 
to reflect upon it until they can make a practical appli- 
cation of the facts, principles and methods given in fram- 
ing a proper answer to any question which may be fairly 
raised. 

In the work of life insurance there are questions upon 
which conscientious men may honestly differ in opinion. 
On these issues we have refrained from taking part with 
either side, but have preferred to briefly state the views 
of the champions of both. 

Such in brief is the purpose of this little volume. If it 
does something toward raising the system of life under- 
writing to the position to which it is entitled by reason 
of the financial interests involved and the usefulness of 
the work it seeks to accomplish, the author will feel 
that he is amply repaid for his labor. 



TABLE OF CONTENTS. 



PAGE 

Character of the Work i 

First Things to be Learned . • . . 6 

Non-Forfeiture Conditions and Reserve • 14 

The Application 20 

Reports of Insurance Commissioners . . 28 

Field Work 41 

Field Work, continued .... 49 

Field Work, concluded 56 

Money and Accounts 63 

Certain Inquiries 70 

Rival Companies . • . . . 77 

Assessment Societies 82 

Annuities and Net Premiums ... 92 

Reserves 103 

Cost of Insurance and the Gains from Vitality, 

Interest and Premium Loadings . . no 

Surplus and Dividends 117 

Non-Forfeitable Plans 124 

Tontine Dividend Policies .... 136 
Insurance for Protection and Insurance for Invest- 
ment 144 

Interest and Mortality Tables . . . 149 



TALKS WITH LIFE INSURANCE AGENTS. 



CONCERNING THE CHARACTER OF THE WORK. 

Every good business man endeavors to dignify 
and elevate the work in which he is engaged. This 
can only be permanently done by showing that the 
good results which he and his associates attain are 
necessary to the comfort, the usefulness, or the hap- 
piness of a considerable number of his fellow-citizens. 
Thus it happens that the man who produces that 
which is most needed, the one who distributes it, and 
the bankers through whose instrumentality the money 
used is handled — each receives a broad recognition. 
And so it is with others. It sometimes happens that 
the one who does not produce anything is among 
the most useful of all workers. The farmer raises a 
crop and protects it from the inclemency of the 
weather. He is in the broadest and fullest sense of 
the term a producer. A fire may destroy that crop 



2 TALKS WITH LIFE INSURANCE AGENTS. 

after it is gathered. Hence the underwriter who, 
when the loss occurs, distributes it so that it is 
borne by a great number of persons instead of one, 
is a valuable public servant. Yet he is in no sense a 
producer. A man may die in his prime. His life is 
of great value to his family. The underwriter steps 
in, and for a consideration protects all dependants. A 
life insurance company shields them from poverty, 
and often from the humiliation incident to either 
being placed under obligations to friends and rela- 
tives or being a charge upon the public. 

Now, what is grander, what is nobler, than the 
effort to induce men to guard those of their own 
households from such misfortunes as we have named? 
Next to the man who goes out to minister to one's 
spiritual needs comes the one who earnestly endeavors 
to induce his fellows to shield those who gather 
around his fireside from the direful possibilities which 
overshadow them. 

Did you ever stop to reflect upon this matter ? Do 
you not recognize the fact that life insurance furnishes 
the only method by which absolute protection can be 
attained ? Do you know of any system of benevo- 
lence which reaches so high or goes so far ? We are 
sure that the more you reflect upon this matter the 



CHARACTER OP THE WORK. 3 

more it will grow upon you, and the more important 
it will appear. 

You are engaged in a work the outreach of which 
you cannot possibly comprehend. A score of years 
hence — yes, twoscore, or even half a century hence — 
the effort, of to-day may yield fruit in the protection 
of a widow or a child, and possibly a grandchild, 
long after you are dead and forgotten. Is not this 
work worthy of consideration by men of generous 
impulses ? 

AVe have spoken of the work ; now we desire to 
speak of the worker. His occupation is peculiar. 
He goes from man to man. He must preach as 
earnestly as John the Baptist, if he would succeed. 
In season and out of season he must persuade men 
to insure for the protection of those who are nearest 
and dearest to them. This must be the one thought 
— the one purpose. 

Now, why is it that men who are engaged in so 
grand and so noble a calling cannot come together 
and endeavor to strengthen each other's hands and 
hearts? We all know the bickering, the unrest, 
which comes from an unfair, an unfriendly, and a 
disastrous competition. We all know the great in- 
jury which has been done to the eotire work by 



4 TALKS WITH LIFE INSURANCE AGENTS. 

unscrupulous agents. We recognize the fact that it 
often happens that^ at the present time, there is no 
adequate remedy against the wrongdoings of an un- 
scrupulous solicitor. Cannot a cure for evils of this 
sort be devised ? 

We are glad to know that the best men in the 
agency work are to-day hand in hand in their efforts 
to correct these abuses. They are earnestly endeav- 
oring to create a sentiment in the face of which a 
solicitor will hesitate before he oversteps the bounds 
that circumscribe methods which are recognized as 
legitimate. It should be understood that, if he does, 
he will be refused recognition at the hands of every 
honest manager in the business of life underwriting. 

We utter a trite truth when we say that the work 
of life underwriting is too noble and too useful to 
be besmirched at every corner by men who have no 
knowledge of it, no heart in it, and no respect for it, 
and whose presence in it does an injury which is far- 
reaching and destructive. 

Now, the class of agents to whom we have referred 
could not belittle the work if they did not meet with 
encouragement at the hands of superintendents and 
managers. The latter have only to determine that 
the business of life underwriting shall be purged of 



CHARACTER OF THE WORK. 5 

this disreputable element, and then to act promptly 
and discreetly, in order to cure the trouble. The 
knife is sometimes needed to eradicate the tumor, 
and while the operation may be a disagreeable one, 
it often restores the patient to health. 

We believe the business of life underwriting to be 
too valuable an adjunct to our modern life to be 
trifled with by charlatans, confidence men, or even 
by men honest but ignorant. If the system is to be 
built up ; if its healthy growth is to be commensu- 
rate with its opportunities ; if the extent of its use- 
fulness is to bear any adequate relation to the benefi- 
cence of its purposes — those who are engaged in its 
advancement must command and retain the confidence 
of the communities where they are located by reason 
of their integrity of purpose as well as by a clear and 
accurate knowledge of the work they have in hand. 
By no other course can an extended success be won. 



TALKS WITH LITE INSURANCE AGENTS. 



CONCERNING FIRST THINGS TO BE LEARNED. 

We have been asked to talk with you in respect to 
elementary matters. There are some things which it 
will be necessary for you, as a newly-appointed agent, 
to know before you can approach even your best friend 
for the purpose of impressing upon him his duty in 
respect to protecting his family by means of a policy 
of insurance. The essential idea of the life insurance 
contract is that, in consideration of the payment of 
certain sums on dates agreed upon, the company, in 
the event of the death of the party insured, will pay 
to his legal representatives the amount named in the 
policy. This enables a poor man to leave an estate to 
provide for his family, and the business man a fund to 
protect his financial interests. We know of no other 
means by which this can be so readily and surely done. 

At the outset your attention is called to the fact 
that there are three classes of companies doing busi- 
ness in this country ; viz., the mutual, the mixed, and 
the proprietary. 

In a mutual office there is not a dollar of capital 



FIRST THINGS TO BE LEARNED. 7 

stock. The officers are elected by and from among 
the assured. The entire business is conducted in their 
interest. All the surplus belongs to them. Indeed, 
they are the owners of the office. Each member has 
an undivided interest in the funds accumulated. 

In a mixed company there is a capital stock, the 
holders of which control the corporation. They elect 
directors from among their own numbers. The busi- 
ness is done on a basis that is termed '' with profits.^' 
As a rule, the proportion of the surplus which is paid 
to the shareholders is limited by the charter and by- 
laws of each individual office. There are several 
offices in which the annual dividend cannot exceed 
seven per cent, of the capital stock. In the United 
States this class of companies always deals fairly by 
the assured. We know of no case in which a bur- 
densome discrimination is made against them. 

In a purely proprietary company there is a capital 
stock, the shareholders of which own the capital and 
appropriate all the profits of the business. The sur- 
plus belongs wholly to them. They sell so much 
insurance for so many dollars. The contract is 
simple and definite. The premium rates are usually 
less than in mutual or mixed offices. 

It IS an open question as to whether the mutual or 



8 TALKS WITH LIFE INSURANCE AGENTS. 

the mixed system is the better. Both have warm ad- 
vocates. Each has produced excellent results for the 
policy-holders. As you enlarge your views of the 
business^ and your interest in it, the probabilities are 
that you will espouse one or the other of these 
systems. 

The next thing to do is to gain an insight in re- 
spect to the office which has favored you with an 
appointment, and as to its methods of doing business. 
You should ascertain as to which of the classes named 
above it belongs. You should inquire further re- 
garding its age, its volume of assets, of surplus, of 
outstanding insurance, as well as to the volume of 
new business which it does and the dividends which 
it has paid to its policy-holders. You should also 
learn as much as you can in regard to its expense 
ratios, and as to whether or not its loss rate has been 
favorable. These necessary facts can be readily 
learned from the annual statements of the company 
and from the reports of Insurance Departments. 

It will take some time for you to gain the specific 
knowledge you need in regard to the company^s plans 
and methods. In these matters you will find that 
the prospectus of the office will give you full and 
explicit information. You should study it carefully. 



FIRST THINGS TO BE LEARNED. 9 

Be sure that you know everything it contains. Also 
carefully examine everything which the company 
prints for the use of its agents and policy-holders. 
You will get a valuable suggestion in every para- 
graph. 

The insurance contract of the office should be most 
carefully examined. This consists of an application, 
signed by the insured and held by the office, and a 
policy, which is neither more nor less than a promise 
to pay a specified sum under certain conditions, exe- 
cuted by the company and given to the insured. Re- 
member that these documents taken together form the 
contract. To enable the policy-holder to get an in- 
telligent notion of the agreement, a copy of the 
application is usually furnished with the policy. In 
most States the law requires this to be done. 

Nineteen-twentieths of all life insurance contracts 
written are included in three great classes ; viz., the 
whole life policy, the term policy, and the endowment 
insurance policy. 

The whole life policy is payable at death only. It 
may be paid for either in annual, semi-annual, or 
quarterly premiums. 

In the ordinary whole-life policy the payment of 
these premiums continues till death. 



10 TALKS WITH LIFE INSURANCE AGENTS. 

In the limited payment life policies the premiums 
are paid for a specified number of years. The usual 
terms are one, five, ten, fifteen, or twenty years, in 
which cases they are called single payment life, five 
payment life, ten payment life, fifteen payment 
life, twenty payment life, etc. This is a most valu- 
able form of contract, as it enables a man to make 
all the required payments during the money-earning 
period of his life. 

The term life policy continues a certain number 
of years, and then expires by limitation. It fur- 
nishes protection for a specified number of years at 
a smaller cost than other forms of insurance. In 
some companies, at the expiration of the term for 
which the policy was written, it may be surrendered 
for a new policy for a similar term of years, and so 
on from term to term during the whole of life, the 
premium charged being that at which such new 
policies were written. There are renewable term 
policies in which no such exchange is required. 
While at the issue of the first of a series of policies 
of this class the premium charged is much less than 
in policies by equal annual premiums during life, it 
increases with successive terms until it is much 
greater than on the whole life policy referred to. 



FIRST THINGS TO BE LEARNED. 11 

This form of insurance has a place in the business 
which is increasing in importance. 

The endowment policy, as usually written, pro- 
vides for the payment of a principal sum named 
therein at the end of a given term of years, or at 
death if it occurs sooner. The term of the endow- 
ment may be for ten, fifteen, twenty, or more years. 
It is sometimes written to become payable on the at- 
tainment of the age of thirty-five, forty, forty-five, 
fifty, etc., or at death, if it occurs before the age 
named is reached. This is an exceedingly desirable 
form of policy for the young and the middle-aged 
man. It furnishes both an insurance and a pro- 
vision for old age. Upon policies of this class the 
payment of premiums may be limited to a stipulated 
number of years. For example, a thirty-year en- 
dowment can be paid for in one, five, ten, fifteen, or 
twenty years, as the insured may elect. 

The policies of all the classes we have named 
may be paid for by annual, semi-annual, or 
quarterly instalments. 

We have spoken of classes of policies. If you 
carefully examine the premium rates given in the 
company's schedules, you will find them to corre- 
spond w^th the forms of contract issued. At the 



12 TALKS WITH LIFE INSURANCE AGENTS. 

head of each page is a general statement in regard 
to the character of the policies, and at the head of 
each column a specific statement in respect to the 
particular forms of policy to which they apply. 
Look over those tables well, and be sure you fully 
understand their significance. If you are not 
certain in regard to them, seek information from 
your immediate superior. 

Scrutinize the company^s policies for the purpose 
of gaining a knowledge of the conditions contained 
therein. These may relate 

To residence, travel, and occupation; 

To manner of death ; 

To contestability ; 

To distribution of surplus ; 

To cash surrender values ; 

To non-forfeitable conditions , 

The tendency at the present time is to simplify 
the insurance contract. In nearly all the offices 
it has been relieved of burdensome conditions. 
Absolute freedom in regard to travel, residence, and 
occupation is given at the outset or after from one 
to three years. There are in the policies of many 
companies no restrictions against suicide ; and in 
others the restrictions continue only two or three 



FIRST THINGS TO BE LEARNED. 13 

years. Policies are usually incontestable after from 
one to three years by reason of any error or omission 
in the original application^ save in respect to age, 
in which case the office will pay the amount of 
insurance which the premium received will purchase 
at the actual age of the party — never, however, 
exceeding the face of the policy. 

Examine the literature and contracts of your 
company in respect to all the matters to which we 
have referred. Be certain that your information is 
exact and that you have it at your tongue's end. 
A general notion in regard to these matters is not 
sufficient. Go over the ground until you can 
promptly and accurately answer any fair question 
which may be asked. The matter of dividends, cash 
values, and non-forfeiture conditions is important. 
As these topics will require considerable space for 
their discussion, they will be deferred until the 
next and subsequent conversations. 



14 TALKS WITH UJPE INSURANCE AGENTS. 



III. 

CONCERNING NON-FORFEITURE CONDITIONS 
AND RESERVE. 

In the last chapter we promised to say some- 
thing to you about endorsed surrender values and 
non-forfeiture conditions which may be embraced in 
the policy you have examined and in others you 
may meet, and to point out in a general way the 
reason for a reserve. 

If you examine the ordinary life policy, upon 
which the premiums are payable in equal annual 
instalments until death, you will find that the 
contract provides that upon its surrender at any 
time after two or three full years' premiums have 
been paid, either — 

That the company will issue a paid-up policy 
for such a sum as the reserve will purchase as 
a single premium at the company's published 
rates ; or 

That a paid-up policy will be issued for such a 
sum as the reserve, less a certain per cent, of what 



NON-FORFEITURE CONDITIONS AND RESERVE. 15 

is termed the insurance value, will purchase as a 
net single premium ; or 

That a paid-up policy will be issued for an 
amount stated in the surrender contract, which 
amount is usually expressed in figures. 

In limited payment life and in endowment 
policies it will be found that after two full years' 
premiums have been paid, upon surrender of the 
contract, either 

That a paid-up policy will be issued for an 
amount which bears the same ratio to the surren- 
dered policy that the number of premiums paid 
bears to the number to be paid (for example, a 
ten-payment life policy upon which two premiums 
have been paid, would be entitled to paid-up 
insurance for two-tenths of the original amount) ; or 

That the paid-up policy will be issued for such 
an amount as the reserve will purchase as a 
net single premium at the company^s published 
rate; or 

That such a policy will be issued for an amount 
which the reserve will jDurchase as a net single 
premium, less a surrender charge based upon the 
insurance value. 

It is possible that a policy may be found which 



16 TALKS WITH LIFE INSURANCE AGENTS. 

contains provisions stipulating that, in the event of 
default in the payment of premiums, the entire 
amount of the insurance may be extended for 
such a period as a certain per cent, of the reserve 
or net value will pay for as a net single premium. 

There is a form of policy which upon default in 
the payment of any premium immediately becomes 
good for a definite amount of paid-up insurance. 
This is the case with all policies issued by companies 
in a number of States. 

You will find that there is a form of policy for 
which upon surrender the company will pay a defi- 
nite cash value, which is generally expressed in figures 
upon the contract. 

It is by no means impossible for a single policy 
to contain two and even three of the conditions we 
have named. The more general form is to provide 
for paid-up insurance in the event of surrender within 
a certain period after there has been default in the 
payment of any premium. An endorsed cash value 
is sometimes given in addition. 

And here the issue may be fairly raised as to why 
companies should give either cash or paid-up values 
in the event of the surrender of the contracts. The 
question cannot be intelligently answered without 



NON-FORFEITURE CONDITIONS AND RESERVE. 



17 



giving you an idea in respect to the nature of the 
reserve or the net value of the policy. You will 
always find in a report of a company's condition 
that the amount of this reserve is stated, and that 
it is placed on the liability side of the sheet, in which 
it constitutes the principal item. 

If we take the life of an ordinary man, we shall 
find that the risk of dying increases year by year. 
We find the same fact to be true if we take a large 
body of men at any given age. As they grow older 
the per cent of the number dying constantly in- 
creases until the last one dies. We give below, by 
way of illustration, a little table showing the per 
cent of the probability of dying, at a few ages divisi- 
ble by five, as given by the Actuaries' Table of Mor- 
tality : — 



Age. 
45 
50 
55 
60 
65 
70 



Probability 
of Dying. 

. 1.22 

. 1.59 

. 2.17 

. 3.03 

. 4.41 

. 6.49 



Age. 

75 

80 

85 

90 

95 

99 



Probability 
of Dying. 

9.56 
. 14.04 
. 20.51 
. 32.37 
. 58.42 
. 100.00 



The last one dies before the full century is reached. 

It is easy for you to see, even on the most casual 
examination of these figures, that the uniform annual 



18 TALKS WITH LIFE INSURANCE AGENTS. 

premium received by the company covers a constautly 
increasing risk ; consequently a portion of the earlier 
premiums received must be retained and improved 
at interest to meet the losses, which will grow larger 
each succeeding year. The amount kept for this 
purpose is called the reserve. If a given table of 
mortality and a rate of interest is assumed, the re- 
quired reserve can be accurately determined for any 
moment in any year of the existence of the policy. 
As a matter of fact, in every well-organized office the 
computation is made at least once a year. Every 
office is compelled by law to set aside and invest the 
reserve computed upon a conservative assumption in 
respect to mortality and interest. Now, when a 
policy is surrendered, the right to a portion of this 
accumulated fund is recognized, and the reserve on 
the individual policies becomes the basis upon which 
non-forfeiture and surrender- value engagements are 
made. No company would think of forfeiting the 
entire reserve on the policy in case of non-payment 
of the premiums after three or more years' premi- 
ums had been paid, unless it was under a specific 
arrangement to throw all gains of ^this sort made by a 
particular class of policy-holders into a pool for the 
benefit of such class, lu all non-forfeiture arrange- 



NON-FORFEITURE CONDITIONS AND RESERVE. 19 

ments, however, the company claims the right to re- 
imburse itself for the loss of the insurance by taking 
a certain amount of the reserve. This is technically 
called making a surrender charge. 

As a rule, you will find that a majority of the offices 
are averse to endorsing cash values upon the policy. 
This arises from the fact that in case of a stringent 
money-market the company might be embarrassed by 
the difficulties incident to the realizing from its in- 
vestments the amount required to pay for surrendered 
policies. Another argument against this practice is 
found in the fact that the purpose of the company is 
to sell insurance, and not to buy it. 

You will find this whole subject of paid-up insur- 
ance and cash values exceedingly interesting and 
important. You should make yourself familiar with 
it in all its phases. It is a matter which will be re- 
ferred to by nearly every man with whom you talk. 
It is one of the hooks upon which you will hang 
your arguments when you endeavor to induce your 
acquaintances to give you their applications. 

For further information upon this subject the 
reader is referred to Talk XVI. 



20 TALKS WITH LIFE INSURANCE AGENTS. 



IV. 

CONCEROTNG THE APPLICATION, 

There are many things which you ought to know 
before trying your hand at field work. Prominent 
among these is a knowledge in respect to the appli- 
cation. This is the basis of the insurance contract. 
Its execution always precedes the issue of the policy. 
You should examine the form used by your company, 
and should understand the full import of every ques- 
tion. If you are in doubt at any point, seek informa- 
tion from your immediate superior. 

Until within a few years the party insured or his 
representative filled up the answers to nearly all in- 
quiries concerning the health, habits, family record, 
to what offices previous applications had been made, 
and whether they were accepted or rejected, etc. The 
investigation of the medical examiner related more 
especially to the applicant's present physical condi- 
tion, although there were usually two or three in- 
quiries which referred to his previous state of health. 
This form is, we believe, used at the present time iij 



THE APPLICATION. 31 

only a few offices. Still it is best for you to know 
something in regard to it. 

In the form of application used by a large ma- 
jority of the offices the number of questions to be 
asked by the agent and answered by the insured have 
been greatly reduced. The following interrogations 
are all which are contained in the application of a 
leading company : ^^ Full name? Occupation? Date 
of birth ? Is the party in good health ? For whose 
benefit is the proposed insurance? How related to 
the insured ? Amount of existing insurance ? In 
what offices and for what amount ? Has any com- 
pany ever refused to issue a policy upon the life of the 
applicant ? Is he engaged in the manufacture or sale 
of intoxicating, spirituous, or malt liquors ? Amount 
of insurance required ? Plan ? Term of payment ? ^^ 
There are, of course, variations from this standard ; 
but they can be easily noted. 

All the rest of the inquiries in this form of appli- 
cation to be answered by the insured must be made 
by the medical examiner, and filled up in his own 
handwriting. He makes a return for the company's 
information by answering the queries proposed to him. 
Where all the answers of the insured and of the 
medical examiner are made on one sheet of paper, 



22 TALKS WITH LIFE INSURANCE AGENTS. 

it is usually returned to the agent and by him sent 
to his immediate superior. In some offices the work 
of the medical examiner is kept apart from that of 
the agent. In such cases the former is furnished 
with a specific blank containing the inquiries to be 
propounded by him to the insured, the questions and 
answers to which constitute his special report. He 
sends the results of his work to the medical depart- 
ment at the home office. 

As the application is the basis of the contract, great 
care should be exercised in answering the inquiries 
therein propounded ; if the form of application re- 
ferred to in the second paragraph of this chapter is 
used, you should take nothing for granted. Be very 
certain that you get the place and date of birth right. 
Pay special attention to inquiries in regard to grand- 
parents, parents, uncles, aunts, brothers, and sisters, 
when such questions are asked. State clearly if these 
relatives are living, their age, whether or not they are 
in good health, etc. ; if dead, the cause of death and 
the age at death. These answers embody important 
information. Be sure to give full replies to inquiries 
relating to pulmonary, scrofulous, or other hereditary 
diseases in the immediate family. You should be 
very careful to get the occupation clearly stated; 



THE APPLICATION. 23 

also previous occupation. If he is at present or has 
heretofore been engaged in the manufacture and sale 
of distilled, vinous, or malt liquors, give all the facts. 
You have no right to withhold any information in 
respect to these matters from the managers of the 
company. 

We wish to impress upon you the necessity of hav- 
ing the party who applies for insurance understand 
the full import of every question and answer. The 
reason for this will be apparent when it is remembered 
that the oflBce under the contract in either form of 
application is entitled to know all the facts, and 
that any untrue answer may vitiate the insurance 
contract. You have no right by your carelessness 
to jeopardize the interests of the beneficiaries. 

State very clearly the plan of insurance desired, 
and how the payments are to be made, whether 
limited or continuous. It would be not a little awk- 
ward to receive, for example, a twenty-year endow- 
ment policy instead of a twenty-year life, and vice 
versa. This would be particularly embarrassing if, 
while you are waiting to have the policy corrected, 
your rival over the way, knowing that you have not 
collected the premium, was doing his utmost to con- 
vince your patron that he had better secure an insur- 



24 TALKS WITH LIFE INSURANCE AGENTS. 

ance in his company instead of the one which you 
represent. A similar result might arise from an in- 
complete answer to any other question. It is also far 
from pleasant to be compelled to go to your patron 
and ask him to sign a corrected and amended state- 
ment. The moral effect may be very bad. 

Write all answers plainly. Avoid all erasures and 
interlineations in your replies to the questions con- 
tained in the application. If you make a mistake 
which requires modification, take a new blank rather 
than attempt to make any change ; but if it is neces- 
sary to make a correction, the insured should certify 
to it over his own signature in a statement written in 
the margin. This is always an offence to the aesthetic 
sense of all those who desire to do clean work. Com- 
plete the application at one time, with one pen, and 
with ink from one bottle. If this is not done, the 
door is open to the suggestion that something is 
wrong. The application should, as far as possible, 
bear upon its face the evidence of honest intent. 
This may appear to be a trivial matter, but it is 
possible that it may save you and the parties inter- 
ested from serious annoyance. 

And here, by way of suggestion, we would caution 
you against using purple or other forms of aniline 



THE APPLICATION. 25 

ink. Use a good black standard writing-fluid. It 
may be half a century or more before the claim is 
paid. It is essential that all the writing contained 
in the application should be legible at the maturity 
of the policy. 

You will find that in a great number of cases the 
life of one person is insured for the benefit of another. 
The former is called the insured and the latter the 
beneficiary. The law assumes that every insurance 
contract, whether it covers a fire, a marine, or a life 
risk, must be supported by a financial interest. The 
ownership of property gives such an interest. In life 
insurance the wife and the natural representatives of 
the insured have such an interest. It is also created 
by a debt. Thus if A owes B, say, $1000 or any 
other sum, B may insure the life of A for such an 
amount as might reasonably be supposed to be 
sufficient to liquidate the debt, the premiums paid 
for the continuance of the policy, and the interest 
on the combined sum. It will be readily seen that 
the policy may be for an amount considerably in ex- 
cess of the original debt. If, however, there are no 
financial relations or ties of kinship or consanguinity 
between A and B, then A cannot insure the life of 
B in his own behalf. This would be a wager policy, 



26 TALKS WITH LIFE INSURANCE AGENTS. 

which is prohibited by the laws of this and other 
civilized countries. A member of a partnership may 
be insured in favor of the other members of the firm. 
We call your attention to the general principles in- 
volved, in order that you may avoid falling into 
error. When you are in doubt, always advise the 
party whose life is proposed to have the policy 
made in behalf of his legal representatives. 

We desire to advise you to be careful in respect to 
advising your patrons to make their policies payable 
to minors, whether children or otherwise. It is prac- 
tically impossible to change the interest of such poli- 
cies until such minor beneficiaries have attained the 
legal age. You should not forget tLat it may be of 
the highest importance to a man to have the interest 
in the policies upon which he pays the premium with- 
in control. 

When the application is duly executed, hand it to 
the medical examiner. He will fill up the answers 
to the additional questions, and then examine the 
applicant and write out his report. In accordance 
with his instructions from the home office, he will 
either return this form, when it is filled up, to you, 
or send it to the company. 

You should remember that it would be a grave 



THE APPLICATION. 27 

breach of the regulations of a well-conducted office 
for you to be present while the medical examiner is 
doing his part of the work. You had better not 
place yourself in a position where you will incur 
the liability of being invited to retire. 

Be sure to collect the premium, whenever it is pos- 
sible to do so, at the time the application is signed. 
The reason for this is obvious. Give a receipt on a 
blank provided by the company for that purpose. 
Do not under any circumstances use any other form, 
as by so doing you may create grave complications. 



28 TALKS WITH LIFE INSURANCE AGENTS. 



V. 



CONCERNING THE REPORTS OF INSURANCE 
COMMISSIONERS. 

Very early in your experience you will find that 
constant references are made to the reports of the Insur- 
ance Commissioners and Superintendents of the several 
States.* These documents are about the best and 
among the few authorities we have in respect to the 
standing and condition of the companies which are 
engaged in active business. You will find it largely to 
your advantage to be conversant with them. They will 
be of constant service to you in your work. 

The reports are made up from the sworn statements 
of the several companies. Answers are given to ques- 
tions furnished by the Insurance Departments. From 
these returns, which are printed in full, tables are made 
up for convenient use. From these yearly reports 
you can ascertain the amount and nature of the 
income and expenditures of each company whose 
statement is given therein; the number and amount 
of the policies issued and terminated; the increase 

* The Compendium of Oflacial Insurance Reports, published annually by 
The Spectator Company, contains the various details of company statements 
•et forth in the State Department reports, but in more condensed shape. 



REPORTS OP INSURANCE COMMISSIONERS. 29 

or decrease of the amount of outstanding insurance ; 
the expenses of management; the number and 
amount of death claims paid during the preceding 
year ; the number of policies, their classification, and 
the amount at risk under each class ; the amount of 
assets in hand ; the amount of the liabilities, including 
the reserve, and the amount of deferred and uncollected 
premiums at the end of the year. 

You will also find returns from assessment compa- 
nies which, as tabulated, show their assets, liabilities, 
income, expenditures, ratio of claims paid to receipts, 
and the ratio of expenses to receipts, as well as a sum- 
mary of the general business transacted. This infor- 
mation may at times be very helpful to you. 

Valuable as the reports are to you, there is great 
danger of your being misled by them. You may 
easily reach wrong conclusions from a consideration 
of the statements therein contained. They can be so 
used that the worse can easily be made to appear as 
the better side. In common fairness towards those 
whom you approach, as well as in justice to yourself 
you should be very careful to deduce just conclusions 
only. 

Do not forget, when referring to these reports, that, 
while the information given is essentially correct, 



30 TALKS WITH LIFE INSURANCE AGENTS. 

they do not contain all the facts necessaiy to form a 
fair conclusion in regard to the comparative standing 
of the various offices. 

There are some things, however, upon which you 
can rely. Among these we might name the size of 
the company, including the amount of outstanding 
insurance, the asset accumulations, the amount of in- 
surance written and cancelled, the character of the 
investments, and the nature of the liabilities, includ- 
ing the amount of re-insurance reserve. You can 
also inquire as to the progress of any company from 
year to year. It is your duty to ascertain all these 
facts in regard to your own or any rival office. As 
we have already intimated, you will require more in- 
formation to ascertain the full force of these facts in 
their relation to the companies under consideration 
than the reports give. 

It is a very easy matter to compare the assets with 
the liabilities of the several offices, and it is natural 
enough to conclude that the one which has the highest 
ratio is the strongest and most desirable company. 
You could not possibly be led into a greater error. 
All other things being equal, the conclusion would 
be correct; but conditions in the various offices are 
widely dissimilar. One would hardly say that au 



REPORTS OF INSURANCE COMMISSIONERS. 31 

office with $175,000 of assets and with $100,000 of 
liabilities was as strong as an office with $120,000,000 
against $100,000,000 of liabilities, although the for- 
mer has $175 to each $100, while the latter has but 
$120. In times past, by counting in the capital stock 
as an asset, and counting it out as a liability in the 
other, the claim has been made by offices just starting 
that they had $500 and even $600 to every $100 of 
obligation. Indeed, on this basis an office is stronger 
when it has issued its first policy than it ever is after- 
wards. The absurdity of this proposition will be 
manifest upon a moment^s thought. 

The ratio of assets to liabilities, even in large offices, 
depends to no inconsiderable extent upon the methods 
of doing business. A company in which dividends 
are deferred for five years or more, or in which divi- 
dends are paid at the end of the second or third year, 
will, of necessity, hold a larger amount of surplus than 
an office in every other respect similar save that it 
pays its dividends at the end of one year. Some years 
ago, one of the leading mutual companies had $176 to 
every $100 of liabilities; the next year it had but 
$103. On the face of these facts an adverse criti- 
cism might be made; but its injustice will appear 
when the fact is remembered that dividends were de- 



32 TALKS WITH LIFE INSURANCE AGENTS. 

clared but once in five years, and that during the 
sixth year the surplus was apportioned and paid to 
the policy-owners. The company did not keep funds 
which it could properly return to make an exhibit 
which would have been practically useless. And so 
when an office issues tontine or deferred dividend 
policies, common fairness demands that the amount 
of surplus arising from this source should be clearly 
set forth. 

You cannot even compare the premium income of 
one office with another, unless you know the practice 
of the company in making it up. Let us, by way of 
illustration, take three companies, in each of which 
the following facts obtain : — 

The premiums charged on the face of the 

premium-paying policies are . . $1,000,000 

The dividends apportioned are . . 200,000 

The amount of reserve canceUed on policies 

surrendered for paid-up insurance is . 400,000 

Let US assume that in the third of these cases divi- 
dends are used to purchase reversionary additions, or 
paid-up insurance, which are added to the policy. 

The first company makes its statement as follows : — 

Premiums $1,000,000 

Less dividends 200,000 



Leaves net income of . . • $800,000 



REPORTS OP INSURANCE COMMISSIONERS. 33 

The second company makes the following state- 
ment : — 

Premiums actually received . . . $1,000,000 

In this case the renewal receipts call for the full 
premium, and the policy-owner signs an acknowledg- 
ment of the amount of dividend which is received 
as a voucher. 

In each of these two companies when paid-up poli- 
cies are issued in lieu of premium-paying policies, the 
surrender and cancellation of such premium-paying 
policies are recognized as a consideration, and this fact 
is so stated in the new contract. 

The third office makes up its account as follows : — 

Premiums as per renewal receipts . . $1,000,000 

Dividends used to purchase additions to 

policies 200,000 

Amount of reserve on policies surrendered 
for paid-up insurance as consideration 
for such paid-up insurance . . . 400,000 

A total income of . . . . $1,600,000 

In the latter case the reserve cancelled, as stated, is 
charged to surrender- values and credited to premium- 
income. 

Here are three offices where the facts are exactly 
the same, yet one returns an income of $800,000, 
another of $1,000,000, and the third of $1,600,000. 



34 TALKS WITH LIFE INSURANCE AGENTS. 

You can readily see that it is impossible without 
knowing all the facts — and the Commissioners' re- 
ports do not contain them — to make a comparison 
between these companies. 

You will hear very much said in respect to the ex- 
pense ratios of the several companies. It is some- 
times claimed that the office which appears by com- 
parison of these ratios in the most favorable light is 
the most economically managed. This conclusion 
will not always be found to be just. 

Taking the companies referred to in the foregoing 
illustrations, let us assume that the entire expenses of 
management are $200^000 in each case. We then 
have :— 

$200,000 against $800,000 in the first case, or a ratio of 25 per cent. 
200,000 " 1,000,000 " second" " " " 20 " " 
200,000 " 1,600,000 " third " " " " 12^ " « 

It could hardly be contended that the third office 
is more economically managed than the first, yet on 
the face of the returns this would appear to be the 
fact. This shows how easily one might be misled by 
ratios. 

There is another fact which is entitled to considera- 
tion in this connection. It is the amount of in- 
come which is received from first year's premiums 
as compared with the entire premium-income of the 



REPORTS OF INSURANCE COMMISSIONERS. 35 

office. This can be clearly shown by an illustration. 
If each of two companies, one of which has an in- 
come from second and subsequent years' premiums 
of $5,000,000, and the other of $1,000,000, should 
secure an income from new business of $500,000, and 
if the expense of the first year's business was sixty 
per cent of the premiums received, and of the second 
and subsequent years' business the cost was ten per 
cent of the premium-income, we should have the fol- 
lowing statement : — 

First Company. 
First year's premiums . . . $500,000, of which 60 per cent is $300,000 
Second and subsequent years . 5,000,000, " " 10 " " " 500,000 
A total income of 5,500,000, a total expense of 800,000 

Second Company. 
First year's premiums . . . $500,000 of which 60 per cent is $300,000 
Second and subsequent years . 1,000,000, " " 10 " " " 100,000 
A total income of 1,500,000, a total expense of 400,000 

The ratio of expense to income in the first company would be 14.54 per ct. 
" " " " " « « " second " " " 26.67 " 

Yet as the business is at present conducted it would 
be difficult to say that the first office was more eco- 
nomically managed than the second. 

In the matter of information in respect to losses by 
death, the reports furnish no data which will enable 
you to determine whether the experience of any com- 
pany is favorable or otherwise. You will find tables 
giving ratios of the number of policies terminated by 



36 TALKS WITH LIFE INSURANCE AGENTS. 

death to the mean number of policies in force during 
the year, and the ratio of the amount of losses to the 
mean amount insured. The deductions which can be 
made from these tables are of the most general and 
unsatisfactory character. From a scientific standpoint 
they are utterly worthless. 

In determining in respect to the favorableness of 
the death-claim ratios, the actual present age of every 
insurant must be taken into consideration, as well 
as the form of policy he holds, its amount, and the 
number of years which it has been in force. From 
this data the exact amount of losses which the 
company should experience during any year can be 
determined. With this sum the actual amount of 
the death claims during such year is compared. It 
will then be readily seen whether the company is 
meeting with a favorable or unfavorable experience. 
Such information is now available in the annual 
reports of the insurance companies, filed with the 
several insurance departments of the country, in the 
section known as the Gain and Loss Exhibit. 

You should remember, in this connection, that the 
average age of policy-holders is rarely the same in any 
two companies. The older the company the higher is 
the ratio. We call to mind an oflBce in which a loss 



REPORTS OF INSURANCE COMMISSIONERS. 37 

rate of 1.2 per cent of the mean amount insured was 
shown to be excessive, while in the case of another 
office a loss mte of 2.3 per cent was below that 
which was expected. 

And here we Avould refer to the statement of the 
returns from investments made in the several offices. 
The per cent in one case cannot fairly be compared 
with that in another. The reason is that in the 
several companies this income may be made up or 
very diffi^rent items. For example, in one office the 
appreciation in the value of the securities will be in- 
cluded, and in the other it will not. We have known 
instances in which the addition to the annual rate of 
premium for the purpose of constructing the semi- 
annual and quarterly rates was credited to the in- 
terest account. We refer to these illustrations to 
indicate how widely different the methods in different 
offices can be. 

You should bear in mind that companies are 
limited to certain classes of investments, and that in 
the very nature of things one office cannot have much 
advantage over another in this regard. The largest 
variation in percentages appears to arise from the 
fact that from one to one and one-half per cent more 
can be secured on mortgages in the Western than in 
the Eastern States 



38 TALKS WITH LIFE INSURANCE AGENTS. 

You win find that some very remarkable ratios are 
used by agents and companies. We remember that 
a comparison of expenses with total amount of in- 
surance issued during the last preceding year was 
made by one office, while in another office the ex- 
penses were compared with the entire amount of 
insurance in force, and claims of great economy of 
management were made in each case. You can, of 
course, readily see that these statements were sent 
broadcast for the purpose of misleading the public. 

Some insurance companies issue tables in which 
the dividends paid by the principal offices during a 
series of years are compared with the premiums re- 
ceived. It is not possible from the information given 
in these tables to reach any definite conclusion as to 
the comparative desirability of the several offices. 
Other things being equal, the office which charges 
the largest premium can return the largest dividends, 
although it is in no respect stronger than the office 
which charges the smaller. In companies with the 
same premium schedule, the one which does the bulk 
of its business upon the ordinary life plan can declare 
a larger return of surplus than the one which issues 
endowment policies, as the loadings on the premiums 
for the former class of contract are proportionately 



REPORTS OF INSURANCE COMMISSIONERS. 39 

larger than for the latter. The dividends of one 
office may be declared annually after one year, the 
other may defer the declaration and payment of divi- 
dends for several years. Without a full knowledge of 
the financial and insurance history of all the com- 
panies one cannot form a safe conclusion from any of 
the comparative dividend statements. 

Our assessment friends refer to lapses, which 
they assume occur in the same ratio among policies 
of the earlier issues of level premium offices as among 
those of the later. In this connection the ratios 
which they publish are misleading. Those who are 
at all familiar with the business are aware that the 
policies are not non-forfeitable until they have been 
in force two or three years. It is a fact that nearly all 
lapses take place during this two or three-year period. 
Most of them occur during or at the end of the first 
year. Those who are entitled to paid-up insurance 
usually apply for it. Those who can secure it by the 
payment of an additional premium, as a rule, do not 
permit such payment to go by default. Hence it is 
that there are many policies which are returned in 
annual statements as lapsed upon which the company 
assumes obligations on surrender. Indeed, you will 
early discover that old-line offices do not encourage 



40 TALKS WITH LIFE INSURANCE AGENTS. 

or desire the discontinuance of their contracts by 
forfeiture or surrender. You will find it worth 
while to examine this matter very carefully. You 
may thus be able to prevent your friends from 
being misled. 



FIELD WORK. 41 

VI. 

CONCERNING FIELD WORK. 

As representative of the company which has 
employed you, your sole duty will be to secure 
applications for insurance, to deliver the policies, 
and to collect the first and, if in accordance with 
your contract, the second yearns and all subsequent 
premiums. You will find that the successful prose- 
cution of this work will require all the ability and 
energy you may possess. There is no business which 
requires more tact, patience, and well-directed effort. 
You will, as we have intimated in preceding para- 
graphs, require a knowledge of the theory and 
practice of the business. You will find that a 
knowledge of men is equally important. You 
should be able " to read them like a book '' and 
to comprehend clearly the motives by which they 
are actuated. 

You will early discover that the heart as well as 
the head should be educated to the work. The love 
of wife, of child, and of home, and the desire to 
protect all who are gathered there, are mighty forces 



42 TALKS WITH LIFE INSURANCE AGENTS. 

in this world, and a well-put appeal in this direction 
commands attention, and will often win where all 
talk based on investment features will fail utterly. 
It is often remarked that those who are the keenest 
sympathizers with suffering have themselves at some 
time been sufferers. It is equally true that those 
who can make the best appeal to the emotions are 
those who have been educated by circumstances to 
feel deeply. The good agent will not only keep his 
sensibilities keenly alive, but will also be in broad 
sympathy with his fellows. Without knowing just 
how he does it, he often puts his arms around the 
heart of his neighbor and wins him over. 

There are some things which every new agent 
should always remember. One is that everything 
is possible to the man who works intelligently and 
persistently. The trouble with the average life 
insurance agent is that he spends too much time in 
attending to anything and everything save the busi- 
ness in hand. The clerk, the professional man, and 
the merchant spend from eight to twelve hours a 
day in their several vocations. Why should you 
not do the same? They go systematically to work; 
why should you not do so? Remember that your 
success, like that of workers in other fields, will 



FIELD WORK. 43 

largely depend upon the earnestness of the efforts 
which you may make. 

You should make up your mind at the start to 
" put in ^' eight hours out of every twenty-four in 
tactful, well-directed labor. During this time you 
should work with your whole heart and soul. 
Leave no stone unturned. Let no possible oppor- 
tunity escape you. Let every man understand that 
you are engaged in insuring lives. This will lead 
to constant inquiries and to discussions which may 
lead to valuable results. 

And here we would say, dignify your occupation. 
Never, under any circumstances, by thought or act, 
belittle it. You hold a prominent place among 
the world's most useful toilers. Remember this 
when you are cast down or discouraged. Let it 
be an incentive to you to endeavor to compass 
better things than you have ever before accom- 
plished. 

We cannot urge you too strongly to endeavor to 
systematize your business. Look over the entire 
territory embraced in your agency and devise some 
plan by which you can reach the most prominent 
and influential men who reside therein. You can 
approach some of them directly. Others you can 



44 TALKS WITH LIFE INSURANCE AGENTS. 

reach better by an appropriate introduction. Chance 
will occasionally throw you in company with those 
you most desire to meet. We need not tell you 
to use such opportunities to the best possible 
advantage. 

You should make a memorandum in respect to 
conversations held with each man for whom you 
hope to obtain an insurance. You should note down 
the kind and amount of the policy you have 
suggested and all the facts relating to the personal 
and physical history of the party which are necessary 
to enable you to fill up a proposal. You will some- 
times find that a man will sign an application which 
is already filled up when it would be difficult to close 
up the matter in any other way. 

It is sometimes useful to leave a memorandum 
of form of policy, premiums, etc., with the party 
whom you have approached. This should always be 
done in duplicate. You can thus retain a copy. Be 
very careful how you leave calculations or estimates. 
If you make figures, either destroy the paper used or 
take it away. You cannot afford to leave them to be 
brought out for the inspection of a rival, who may be 
unscrupulous enough to over-bid you, regardless of 



FIELD WORK. 45 

the facts, for the purpose of landing in his net the 
risk which should have found a place in yours. 

There is such a thing as ^^ casting pearls before 
swine." You will find in every community a class 
of men whose patronage could at best amount to but 
little, and whose influence to still less, who are ready 
to discuss insurance topics with you by the hour. It 
does not pay to encourage them. You have only 
three hundred and thirteen working days in the year, 
and, on an average, but eight hours in each day, and 
you cannot afford to spend time or nerve-force in 
directions which will be so barren as far as practical 
results are concerned. 

Whenever it is possible, secure the good-will of 
every man whom you insure. Get him to introduce 
you to his acquaintances. In this way you can en- 
large the area of your influence, and, in time, of your 
business. You will be surprised to find how con- 
siderable a premium income may be secured by the 
influence of one of your patrons. 

In the early part of your work you will meet with 
many discouragements, especially if you are in a 
locality in which you are an entire stranger. You 
will find that constant and well-directed work and 
fair dealing will produce results in time. The horizon 



46 TALKS WITH LIFE INSURANCE AGENTS. 

will gradually enlarge and the skies will light up. 
It may take weeks^ or even months, to get under way. 
In this regard it is like any other occupation. As a 
rule, however, an intelligent, industrious agent can 
establish his business on a paying basis in one-half of 
the time he could in either of the other professions. 

Be very particular always to tell the exact truth in 
respect to both your own and rival offices. Be fair and 
just in all your dealings with your neighbors. You 
will thus gain their confidence, and they will be willing 
to trust you to care for their life insurance interests. 

Some years ago we met an agent who had been 
assigned three or four counties in the central por- 
tion of Pennsylvania. He worked earnestly and in- 
telligently for four months to secure less than $25,000 
in risks. He told the writer that he would succeed ; 
that he would always tell men the exact facts in re- 
spect to any life insurance interest they had, present 
or prospective, and in this way secure a recognition. 
He fought it out on this line. Little by little he 
extended his business. The risks were well solicited. 
There were very few lapses or surrenders. To-day 
he has the usual renewal commission on over two 
hundred thousand dollars of premium-income. He 
has also the confidence of a very large majority of 



FIELD WORK. 4T 

the prominent business men in his territory. What 
proportion of the men in the other learned professions 
can, during a brief period of twelve years, show a 
more valuable financial result for their work? 

Do not be afraid to talk to men and to urge upon 
them the necessity of insuring their lives and the 
propriety of making the application at, the present 
moment. A vast majority of those you solicit are 
naturally dilatory. You can interest them. They 
will talk and ask questions, and call the policy you 
offer a good thing, but they defer action until a more 
convenient season. When men reach this point they 
sometimes need to be lifted up bodily. The man 
who can do this the most gracefully secures the 
largest business. The moral force by which this is 
done exists in some persons to a greater extent than 
in others, but it can be cultivated. As a rule, it re- 
quires a sound mind in a sound body and the 
exercise of consummate tact to secure an application 
from a man who is inclined to lag. It is never wise 
to go to a man whom you seek to insure unless you 
are in good health, and, when you do so, study your 
man carefully, and endeavor to find out from what 
direction it is best to approach him. If possible, get 
on his weak side. 



48 TALKS WITH LIFE INSURANCE AGENTS. 

Never seek to overload your patrons. A man 
with a five thousand dollar income should never 
undertake to pay four thousand of it to a life insur- 
ance office. It will be pretty certain to end in embar- 
rassment. A man had better apply for a policy 
the premium for the continuance of which he can 
meet without financial strain. The payments will 
probably then be met promptly, and the risk of 
discontinuance of the insurance before the normal 
maturity of the policy will be reduced to the 
minimum. 

Never seek to use the influence of the church 
with which you are connected, or of social societies 
of which you are a member, to secure insurances. 
If the members come to you for information, give 
it to them, and insure their lives if they desire 
you to do so. If you approach them in business 
hours in a business way, there is no objection, but 
avoid the shadow of an appearance of using these 
religious or social influences to advance your 
financial ends. To succeed, the agent must depend 
upon the intrinsic value of the system he advocates, 
and the meritorious character of the company he 
represents, supplemented, as we have already said, 
by systematic effort and business address. 



FIELD WORK. 49 



vn. 

CONCERNING FIELD WORK (continued). 

In the last talk we spoke of the value of a full 
record of what you said to those whom you sought 
to insure. You should endeavor to ascertain at what 
date each one will probably be ready to make ap- 
plication, in case you are not able to convince 
him that now is the time for him to act. Watch 
him carefully, and when the day fixed approaches 
be sure to find an opportunity to broach the matter 
to him again. You will after a while find that 
you have a considerable number of such cases on 
hand. By looking after them carefully and dealing 
with them tactfully you may be able in time to 
secure a considerable amount of insurance. 

You must remember that there is a season for 
everything. The question of life insurance is a 
matter of great moment to the average man, but 
he does not want to be confronted with it every time 
he comes in contact with you. The religious feeling 
which prompts to a proper preparation for a future 
state is the highest and grandest of all human aspi- 



50 TALKS WITH LIFE INSURANCE AGENTS. 

rations; but the community soon tires of the man 
who brings his own ^^ experiences '^ to the front on 
every occasion. So you will find that your ac- 
quaintances will tire of you if you pursue a similar 
course. You may carefully study your man ; con- 
sider, if you desire, the best way to approach 
him. Seek an opportunity when he can give you 
his undivided attention, and then present the matter 
clearly, fully, and courteously. Be sure that he 
understands you. Strive to induce him to ask 
questions, which you should answer discreetly and 
fully. You may thus create by your replies an 
interest in the subject. Remember that it is what 
you say, and how you say it, that does the work ; 
indeed, more depends on how you speak than on 
what you speak. You will early learn the truth 
of the old proverb — ^^a word in season, how good 
it is.^^ The business is oftener done by the honest 
and sincere talker rather than by the voluble one. 

In every community there are undercurrents 
which control the business and social life. You 
must find these out, if possible, and take a legiti- 
mate advantage of them. To do this, you will 
be obliged to make yourself an active factor in 



FIELD WORK. 61 

the community in which you live. Remember, 
that as a rule you can reach down better than you 
can up. You cannot afford to occupy an inferior 
social position. You must always be a gentleman 
in both dress and address. Nay, you must do 
more. You must cultivate those qualities of head 
and heart which will command the respect and 
affection of those with whom you are thrown in 
contact. 

We need not remind you that you will weaken 
your hold on the best elements in your territory 
if you frequent saloons and questionable places of 
resort. You may secure some insurances from 
these quarters, but they will not compensate you 
for those you lose in other directions. As a rule, 
the higher the personal character of the agent, and 
the better his social standing, the more valuable 
will his business be, both to himself and to the 
company he represents. 

There are but few things which demoralize an 
agent more in the community in which he resides 
than petty debts. If tradesmen and workpeople 
find it difficult to collect their bills, they will 
certainly create a sentiment against you which will 
stand in the way of your success. The life 



52 TALKS WITH LIFE INSURANCE AGENTS. 

insurance solicitor should keep as near a cash 
basis as he can. It is a good rule to pay for 
everything as you go. You will find in this 
matter that ready money makes friends among 
those with whom you deal, and that they will be 
constant, even if they are at times unconscious, 
workers for you. 

Furthermore, you should be absolutely just in 
all your dealings in every-day life ; take no unfair 
advantage, spring no traps upon your neighbors. 
Such things tell against you and impede your 
progress. Let the views you express on the topics 
of the day be temperate, well-considered, and con- 
servative, and, above all things, just. When you 
reach over into your own business you will find 
that these things will be a moral force which will 
aid you. The instant people believe that they can 
trust you they will come and seek information 
from you. 

You should make it a point to approach those 
whom you are seeking to insure when they are 
alone and, as far as may be, unoccupied. Every 
interruption in the thread of your argument, 
whether by the entrance of an individual or 
by loss of attention from other causes, weakens 



FIELD WORK. 68 

your chance of bringing your interview to a satisfac- 
tory issue. 

Keep your own counsel. There is a great temp- 
tation to vain boasting in the work. Unless there 
is occasion, for business reasons, don't tell your 
neighbors whom you have insured or whom you 
expect to insure. The agents of other offices will 
get this information quickly enough. Furthermore, 
there is some consideration due to the one who is 
your patron. It is more than possible that he 
may not care to have the fact of his carrying a 
policy on his life known. He is your friend, and 
you are bound to respect his wishes in the matter. 

You need to be discreet. You live, as it were, 
in a blaze of light, and people watch you closely. 
Outside of your work be careful what you say. 
The agent who is egotistical or self-conceited, and 
makes it manifest, will be criticised in a censori- 
ous manner. You cannot afford this. Keep your 
personality, particularly the weak side of it, in 
subordination to the business in hand. Make it a 
point always to maintain your own self-respect, as 
you will then much more readily be able to command 
the respect of others. 

In your conversation abroad, as far as possible 



54 TALKS WITH LIFE INSURANCE AGENTS. 

avoid the discussion of the technical portion of the 
business. It is bad taste and worse policy to en- 
deavor to " show off ^^ in this way. Be simple and 
clear in your statements. Avoid confusion of terms. 
Be careful not to get limited payment life policies 
confounded with endowment policies in the mind of 
the applicant. Also be sure that paid-up or rever- 
sionary values are not mixed up with cash values. 
Mistakes of this kind have been far too frequent 
in the past^ and they have invariably led to dis- 
satisfaction. We would emphasize this matter ; it 
is very important. 

We have spoken of insurance as a means of pro- 
tecting one^s family. We have also referred to it as 
an investment. Its value does not end here. One 
of its most useful purposes is the protection of busi- 
ness interests. The creditor can insure the life of the 
debtor. Partners can insure each other. A firm can 
insure its individual members for its own benefit. A 
man can insure his life for an amount sufficient to 
meet his outstanding obligations, and thus leave his 
property unincumbered. A merchant may insure his 
life not only for an amount necessary to meet his out- 
standing bills, but also for an additional sum sufficient 
to protect the business he has created. Most of our 



FIELD WORK. 55 

readers can recall instances where prominent merchants 
carry large lines of insurances for this very purpose. 
In adopting this course they have not only shown 
great wisdom and sagacity^ but also have unquestion- 
ably strengthened their credit. 



56 TALKS WITH LIFE INSURANCE AGENTS. 

VIII. 

CONCERNING FIELD WORK (concluded). 

You should be particular to note the birth-date of 
those with whom you talk. Of course, you are aware 
that the rate in all cases is fixed by the age at the 
nearest birthday. A man who knows that his family 
or his business really needs the protection afforded by 
a life insurance policy may defer the matter until a 
point where an increase in rate is inevitable, and then 
be ready to act. You should never let an opportunity 
of this sort pass, but be on hand to press your claim. 

And here we would call your attention to the fact 
that the nearest age at the date of issue of the policy 
is taken by some companies to be within one hundred 
and eighty-three days from any birthday. Thus if a 
a man was born on January 1st, the next birthday is 
to be taken on and after July 4th ; if the policy is 
dated July 3d, the age of the last birthday should 
be taken. There are other offices which reckon by 
months, in which case, to get the advantage of the age 
at last birthday, the policy should be written before 
July 1st. Until you ascertain definitely in regard to 



FIELD WORK. 6T 

the custom of the company with which you are con- 
nected, give margin enough to be safe under either 
method of computation. 

Very much depends upon the first reception you 
meet. If favorable, it may lead at once to business, 
or it may be made a centre of influence around 
which you can work. On the other hand, it often 
takes weeks, and sometimes months, to recover from 
the results of a meeting where the greeting is un- 
sympathetic and repellent. 

You want a reception which is hearty and sincere. 
You should seek to create not only a favorable im- 
pression at the outset, but also to make those you 
meet become interested in you and in what you say. 
You may thus be able to approach them successfully on 
the subject which business-wise is nearest your heart. 

You will find it very important to be well up in 
respect to the more important topics of the day, as 
well as in the current literature. You should also be 
familiar, to a certain extent, with the great w^orks of 
the past, both in prose and verse. A knowledge of 
art will often do you good service, while information 
in respect to science, to law, to commerce, to finance, 
and to manufactures, will never come amiss. Indeed, 
there is scarcely a branch of human learning which 



58 TALKS WITH LIFE INSURANCE AGENTS. 

may not be useful to you. Even knowledge of the 
movements of society and of its requirements may 
materially aid you in forming acquaintances who 
will help you on in your work. 

When you meet a man, watch closely to discover 
the bent of his mind, and endeavor to place yourself 
on common ground with him. Suggest, if you can, 
thoughts on topics which will interest him. If you 
are able to tell him something about his own work 
which he did not know, you may command his respect. 
Not many years ago a life insurance agent, seeing a 
storm approaching, sought the friendly shelter of a 
shed. He found a stranger there whom, in the course 
of a quarter of an hour, he endeavored to draw into 
conversation. Every topic was suggested which he 
thought might interest him, but only monosyllabic 
replies were made. Wearied, he at last intimated 
that the stranger might suggest some topic. The 
answer was, ^^If ye can tell me something about 
tanning leather, I would be glad of it.^^ As it hap- 
pened, the agent was able to do this. An acquaint- 
anceship sprang up which led directly or indirectly 
to the securing of a quarter of a million dollars of 
insurance. The suggestions furnished by this inci- 
dent may be of value to you. 



FIELD WORK. 59 

In spite of all you can do, " blue spells^^ will come. 
There will be times in which you will be completely 
disheartened. This will be especially true in the early 
history of your agency. You will come in, day after 
day, worn out by hard and fruitless labor, and be 
almost ready to give up. It is right here that the 
true temper shows itself ^^Be gritty.'^ Let your 
ill luck and your discouragement be a spur, instead 
of a drag. Do not repine. Gain fresh strength from 
rest, and then go out into the field again, madder for 
the next bout in the contest. The persistent fighter 
is the one who usually succeeds. 

You will find, as you go, that it is often the darkest 
before day. If you have sowed bounteously, you will 
find that the seed will bring forth fruit in directions 
least expected. You will occasionally find a man 
who listens to you in silence and then turns and goes 
on with his work. You go away feeling that, so far 
as making any impression is concerned, you might as 
well " talk to the side of a house.'^ Yet you will some- 
times find that such men will be good patrons and 
influential friends. As a rule, the quiet listener will 
grasp the facts, consider your argument, and decide 
and act much more quickly than the voluble man. 

" Always keep a stiff upper lip.'' Never, under 



60 TALKS WITH LIFE INSURANCE AGENTS. 

any circumstances, let your discouragement be mani- 
fest. Bear your burdens in silence. If you open 
your heart to your most intimate friends, while they 
will undoubtedly sympathize with you, they will 
nevertheless be likely to go to your apparently more 
fortunate rival with their patronage. There is much 
of truth in the old adage that " nothing succeeds like 
success.'^ The rule of life is that an air of pros- 
perity will bring friends and customers. 

After there have been days of storm and shadow, 
did you ever see a burst of sunlight come through a 
rift in the cloud ? Did you ever notice at such times 
what a gloriously beautiful thing a patch of blue sky 
is ? It makes the blood of a sensitive man tingle 
way down to his fingers' ends. This is something 
akin to the feeling which a new agent has when, after 
days of ill luck which have brought him well-nigh to 
the depths of despair, he lands a large risk and col- 
lects the premium in advance. His face lights up. 
His heart grows warm. He basks in the rays of his 
own success. He has conquered, and he feels san- 
guine that he can in the future win still larger prizes. 

You must always bear in mind that companies 
want business. To accomplish this purpose the agency 
superintendent is created and agents are appointed. 



FIELD WORK. 61 

A lazy and shiftless field man can always find appar- 
ently unanswerable excuses for failure to secure ap- 
plications. The complaint may be that there is no 
money, that everybody is insured, that business is 
poor, that the company is unpopular, etc., etc. Yet 
another agent from the same office will go over the 
same territory and secure a rich harvest. Now what 
is the cause of this difference ? It is simply that the 
last man has tact, has push, has the ability to present 
his case fully and clearly, and so winningly that he 
readily secures a signature to an application for a large 
amount. 

Some persons are so gifted by nature that they can 
readily secure results of this sort, while with others 
the ability to do this must be gained by cultivation. 
The avenues of approach must be sought. The suc- 
cessful agent must come in close sympathy with his 
listener, and must discover, if he can, the motives by 
which he can be moved, and the appeal must be 
made in this direction. As a rule, he will not '' handle 
any two men alike.^^ He follows the maxim, '' be all 
things to all men, in order that he may insure 
some.^' 

When once established, the agent's field widens and 
his vista grows brighter and brighter. His interest in 



62 TALKS WITH LIFE INSURANCE AGENTS. 

the business increases, and in time he arrives at an 
easj financial condition. Indeed, we know of no 
profession which brings a fair reward more surely 
than that of the life insurance agent. As in law and 
medicine, there will be failures ; but these can always 
be traced to incompetency, inefficiency, or lack of in- 
tegrity — causes which will induce disaster in any 
other department of human endeavor. The good 
agent must be honest, earnest, tactful, persistent, 
watchful, industrious — neat in dress and winning in 
address. The more fully he cultivates these qualities, 
the more valuable will be the results which he will 
accomplish both for himself and the community in 
which he labors. 



CONCERNING MONEY AND ACCOUNTS. 63 

IX. 

CONCERNING MONEY AND ACCOUNTS. 

We want to say a few words to you about collec- 
tions, moneys, and accounts. The company, through 
your immediate superior, sends you policies and re- 
newal receipts. You are to collect the premiums and 
account for the same. You act in fiduciary capacity. 
Never for a moment lose sight of the fact that the 
funds in your hands, excepting the allowances under 
your contract, belong to the office. You are simply 
a trustee, and it is your duty to render a fair account 
in accordance with your instructions. 

As a rule, you should not deliver policies, if the 
premium was not collected when the application was 
made, unless the parties are in good health. The 
same rule applies to the delivery of the renewal 
receipts if the money is not tendered until after the 
payments are due. In every such case write at once 
to your immediate superior for advice. You have 
no right to bind the company beyond the limit of 
your instructions. 

There is one thing we desire to impress upon you. 



64 TALKS WITH LIFE INSURANCE AGENTS. 

It Is that you have no right to use, lend, or in any 
other way tamper with the company's funds. You 
should hold them intact. It may be that you want 
to meet a personal bill, and think, if you pay it out 
of your collections, that you will be able to make the 
amount good before the day of settlement. When- 
ever you consider such a proposition you are tread- 
ing on dangerous ground. You could not possibly 
make a graver mistake. This is the " will-o'-the- 
wisp'^ which has lured many a good man to destruc- 
tion. 

You may think that we dwell with unnecessary 
plainness on the matter. The best agents are always 
sanguine. Their success in a great measure depends 
upon this quality of mind. It is not difficult 
to honestly believe that shortages can be made up 
from commissions on new insurances. But it too 
often happens that applications, like the apple of 
Tantalus, appear to be within the grasp, but are 
swept away when the hand reaches out to take 
them. 

An agent should not reason himself into the notion 
that he is working for the company and that it ought 
to support him to ine extent of paying his ordinary 
living expenses. This view has oft«n been taken, the 



CONCERNTNa MONEY AND ACCOUNTS. 65 

company's funds have been used^ and men have been 
disastrously involved thereby. Remember that you 
are working under a specific contract. You are to 
render a certain service for a certain compensation. 
Beyond this you have no claims. If you need 
money, seek an advance from your immediate supe- 
rior. If he sees that you are working earnestly and 
faithfully, with a good chance of success, he will 
probably let you have the amount you require. But 
do not presume upon the possibility of his aiding 
you. 

Perhaps you have bondsmen. Some friends may 
have been good enough to become your sureties. 
Do you want them to make good your shortages? 
Perhaps a guarantee company has become bond for 
you. Remember that such an office always makes an 
example of those whose losses it is compelled to 
make good by bringing a criminal action against 
them. Can you affi^rd to put yourself in its power ? 

We would caution you against taking notes for 
premiums without authority from your immediate 
superior, unless you are able out of your own re- 
sources to promptly pay the company whatever may 
be due. You will find that capital can very profit- 
ably be used in the life underwriting work. Insur- 



66 TALKS WITH LIFE INSURANCE AGENTS. 

ances can be eflfected and policies renewed if the agent 
has money to loan his patrons. Of course, this must 
be done judiciously. Matters can thus be closed up. 
We mention the fact, as it may furnish an agent with 
an incentive to accumulate funds in order to extend 
his business. But he must never count on any aid 
from the company. 

In a preceding paragraph we spoke of lending the 
company's money. Good-fellowship and personal 
popularity, while they are excellent things in their 
way, and lead to business, are dear if purchased at 
the price of wrong-doing. You will undoubtedly 
have many applications for loans from those who 
know you have money belonging to the office in 
your hands. Every argument, every pretext, and 
every possible appeal will be made to you. You 
will be assured that the money will be returned 
before you require it. You will be told that it is 
your duty to help a friend in distress, that it will 
be to your personal advantage, etc., etc. There is 
but one course to take, and that is to say ^^No.^^ 
Let it be understood by your friends and acquaint- 
ances that you will not under any circumstances loan 
money which does not belong to you. 

Be rigidly and scrupulously honest. The taking 



CONCERNING MONEY AND ACCOUNTS. 67 

of the first dollar unlocks the door which leads to 
disaster, financial and moral. It is hard to retrace 
the first downward step. 

You should not mingle the company's funds with 
your own. We once met an agent who represented 
two different ofiSces. He kept separate bank accounts 
for each. He also had an account for his personal 
funds. He remarked, '' Whenever I die there will 
be no trouble. Each company will find on deposit 
the exact amount which is due to it.'' This is a 
good example to follow. 

Keep a set of books. A policy register and a cash 
book will be required. Enter every premium on the 
day upon which it is received. Do not permit any 
delay in this matter. Send out your "premium 
notices" a suflScient time in advance of the date 
upon which they are due. Collect up as closely as 
you can. Be prompt in looking after those whose 
payments are in arrears, and find out the cause of 
the delay. Make an effort to get a settlement within 
the days of grace prescribed by the office in your 
instructions. Eemember that the next best thing to 
getting a new insurance is the renewing of an old 
one. 

You should pay all bills duly authorized by the 



68 TALKS WITH LIFE INSURANCE AGENTS. 

company, take receipts therefor, and enclose them 
with your report. Pay for medical examinations 
promptly. This is not only right, but it is politic, 
as the physician can, if he will, do much to aid you 
in your work. His delay in making an examina- 
tion may give the applicant an opportunity to with- 
draw or go to another office. 

Let your reports be full, clear, explicit, and cor- 
rect. Give not only the number of the policy, but 
also the date upon which the premium was received. 
Be particular to enclose all policies and renewal re- 
ceipts on hand. You can have these returned to 
you if need be. You will thus be relieved from the 
suspicion of " kiting,^^ or, in other words, of collecting 
a premium on a policy and holding it till your next 
report, in order to cover a deficiency in your cash 
account. Keep your work so well in hand that if 
the affairs of your agency were overhauled without 
a mementos notice they would always be found to 
be correct. Your future success will largely depend 
upon the manner with which you attend to these 
matters. You can never secure that confidence 
which will enable you to maintain your position 
if you neglect them. 

Avoid getting into the "drag,^^ for it is a hard 



CONCERNING MONEY AND ACCOUNTS. 69 

matter to catch up. "A stern chase is always a 
long one.'^ The amount of interest and anxiety 
which a deficiency will cause is amazing. Nine 
times in ten it will unfit an agent for his work. He 
cannot carry a financial burden and solicit insurance 
with that zest which will command success. 

The key of the situation is to live within your 
resources. In this way temptation is avoided, and 
four mind is kept in condition to do good work. 
Physically, mentally, morally, as well as financially, 
it pays to be honest. It is not possible for you to 
succeed in any other way. 



70 l^ALKS WITH LIFE INSURANCE AGENTS. 



X. 

CONCERNING CERTAIN INQUIRIES. 

You will early find each office doing business in 
your territory has its own methods and its own 
peculiarities. These you must endeavor to fully 
understand. You should also be well posted as to 
the personnel of each company. You will find that 
the high character of the managers carries as much 
weight in insurance offices as elsewhere, and is an 
element which will always be taken into consider- 
ation. 

The charters of many of the leading offices have 
been set forth in a book entitled " Charters of Ameri- 
can Life Insurance Companies/'* a study of which 
will prove interesting and instructive. The by-laws 
are also given. But as these can be changed at any 
time by the action of the board of directors, you can- 
not assume that they are in force at the present time. 

In a previous talk we told you that there were 
some things which you could gather from the re- 
ports of Insurance Commissioners and Superintend- 

* Published by The Spectator Company, New York. 



CONCERNING CERTAIN INQUIRIES. tl 

ents. Among these are the amount of assets on 
hand, the amount of outstanding insurance, the 
amount of insurance written and cancelled, the 
character of the investments, and the nature of 
the liabilities, including the re-insurance fund, the 
amount of disbursements for death claims, for en- 
dowments, and for dividends to policy-holders and 
also stock-holders, if there are any. Other informa- 
tion may be obtained from the same source. You 
will soon learn, however, that a knowledge of the 
business methods of the company which is the sub- 
ject of your inquiry will be needed to enable you to 
reach just conclusions. 

As a rule, so far as financial conditions and 
methods are concerned, you will find that the state- 
ments given in the companies' annual reports, in- 
cluding the description of the policies issued, the 
methods of doing business, the statement of the 
policy guarantees, etc., are correct. 

We advise you to get all the publications you can 
find regarding any company with which you are 
likely to compete. From these documents you can 
learn in respect to the premiums charged, in regard to 
the dividend system, and whether or not the apportion- 
ment of surplus is paid at the end of one year, and 



72 TALKS WITH LIFE INSURANCE AGENTS. 

every year thereafter, or whether it is deferred for a 
period of years. You must remember that the 
office which pays dividends at the end of one year, 
and annually thereafter, will never hold the per 
cent, of surplus that an office does which defers its 
returns of surplus for a term of years. If an office does 
a deferred dividend business, you should ascertain 
how much of the reserve on lapsed policies belongs 
to the deferred dividend fund. This is usually given 
in the reports of Insurance Commissioners. These 
are very important matters, and are worthy of the 
most thoughtful examination. 

The question of expense is a very important one. 
It requires a pretty complete knowledge of a com- 
pany's method in order to gain a clear notion as to 
whether or not proper limitations are observed. The 
volume of first year's premiums must be known, as 
well as that of the renewal premiums. In the talk 
upon the use of Insurance Commissioners' reports 
we pointed out some of the more important methods 
used by American offices. Find out, if you can, 
whether dividends are used to reduce premiums and 
the balance is returned as income; whether or not 
the income for the full tabular rate of premium is 



CONCERNING CERTAIN INQUIRIES. 13 

returned and dividend receipts are used as a set-off; 
whether single premiums are charged for paid-up 
policies issued in lieu of running policies surren- 
dered, whether dividends are used to purchase ad- 
ditional insurance payable with the policy at maturity ; 
and also whether the last two items are returned as 
premium income. A clear knowledge in regard to 
the practices of the companies in the matters to which 
we have referred, coupled with information given in 
the reports of State officers will, enable you to get an 
impression whether or not the business is economically 
conducted. 

And here we would say that the examination of a 
renewal receipt will sometimes show whether or not 
it is for full tabular rate, and an inquiry will show 
whether a receipt has been signed for a dividend. 
The examination of a paid-up policy issued in lieu 
of a cancelled policy will show whether the con- 
sideration is the surrender and relinquishment of 
Policy No. , or whether it is issued in con- 
sideration of dollars and cents. In 

the latter case you can be very certain that the pre- 
mium income has been increased by the amount of 
the surrender value on the policy which has been 
given up. Certificates of reversionary additions will 



74 TALKS WITH LIFE INSURANCE AGENTS. 

generally show whether or not dividends have been 
returned as premiums received. 

The usual forms of life and endowment policies 
do not vary widely in their general character. The 
points at which you are to look are non-forfeitable 
features, endorsed cash values if any there are, and 
limitations as to residence, travel, occupation, and 
cause of death, including suicide. The character of 
the policies in regard to incontestability should also 
be considered. 

And here we would speak of a matter of some 
importance. The surplus under deferred divi- 
dend policies must be set aside, and is so indicated 
in all published statements. It must be used for the 
benefit of that particular class of contracts. This 
may be so in other forms of deferred dividend policies, 
but it has been more usual to let the accumulations 
remain in the coffers of the company as unappor- 
tioned surplus. If you are endeavoring to get at 
the truth in regard to an office, this matter must not 
be overlooked. 

It used to be the practice, and still is to some 
extent, for companies to issue policies upon 
which the rates are furnished only to agents. In 
competing with an office which issues such policies. 



CONCERNING CERTAIN INQUIRIES. 



75 



as you are entirely in the dark in respect to its en- 
gagements with its policy-holders, it is pretty safe 
to assume that such contracts do not possess any 
special value over the ordinary forms of insurance. 
In responsible companies the policy-holder always 
has to pay a fair rate for his insurance. 

You will find that there is much discussion in 
respect to the question of dividends. They are 
beyond doubt the best measure of a company's 
prosperity. But in order to compare the returns of 
surplus in any two companies, the conditions must be 
substantially the same. This means policies should 
be on the same plan, be issued at about the same date 
to parties of the same age, should contain practically 
the same provisions and restrictions, and that the 
surplus should be apportioned at the same period in 
the history of the policy. Allowance should be 
made for difference in premium rates and for the 
per cent, of surplus which remains on hand, for it 
may happen that one office will choose to create a 
larger fund for emergencies than another. The in- 
quiry should be carried through a considerable num- 
ber of years. And here we would say that policies 
in which the dividend systems are widely different, 
cannot be fairly compared with each other. For 



16 TALKS WITH LIFE INSURANCE AGENTS. 

example, as between a policy with annual dividends 
and one with deferred dividends. The value of the 
accumulation element in the latter case cannot be 
ascertained by one who is not familiar with the 
details of the office. 



CONCERNING RIVAL COMPANIES. TT 

XL 

CONCERNING RIVAL COMPANIES. 

We desire to say something to life insurance agents 
concerning the relations they should hold to rival 
companies. In this day of intense competition for 
new insurances one is hardly able to avoid making 
representations in respect to other offices. Ques- 
tions will be constantly asked by those from whom 
the agent is seeking applications as well as by his 
patrons. 

The best course to pursue is to say as little as 
possible, and, when it becomes necessary to speak, to 
be as fair and just as you would have another agent 
be with the company which you represent. Com- 
panies which do not conform to correct practices or 
economical management must inevitably withdraw 
from active work or be forced into liquidation. 
Those which remain in active business are, as a rule 
sound and solvent, and in every way entitled to con- 
sideration. 

The offices in this country are organized upon the 
same general plan. They are limited in their in- 



78 TALKS WITH LIFE INSURANCE AGENTS. 

vestments ; the cost of securing business in most of 
them is about the same; they do not diflPer widely 
in the degree or character of the security they ofifer, 
and the investments are of substantially the same 
character and yield about the same rate of interest. 
In these matters, which are fundamental, there is 
no point on which an attack can fairly be made. 

There may be some things for which you can claim 
superiority in behalf of your own office. Possibly it 
may have experienced a more favorable loss rate than 
its rivals ; it may have been managed with a greater 
degree of economy ; it may excel other offices in the 
adaptation of its policy contracts to the needs of the 
average man, or it may deal more liberally than 
any of its neighbors with the retiring policy-holders. 
Should the occasion arise, the points we have sug- 
gested may furnish the basis of a fair argument in 
favor of your own company, but even then they 
should not be resorted to unless it is absolutely neces- 
sary. 

You cannot have failed to observe that the new 
agent always attacks rival companies. He endeavors 
to build up a business by tearing other offices down. 
No course is more suicidal, none more reprehensible. 
The instant that men lose faith in one office their con- 



CONCERNING RIVAL COMPANIES. 79 

fidence in all others becomes more or less shaken. 
Now this confidence is one of the corner-stones of 
the insurance structure. It comes slowly, and you 
cannot afford to impair it. 

The thing which is most needed is a practical 
recognition of life insurance as a means of protection 
and investment, coupled with an abiding faith in the 
system. It should be deemed as much of a necessity 
to men who have others dependent upon them for 
support as fire insurance is to the property owner. 
A public sentiment of this character can only be 
brought about by earnest and well-directed efforts on 
the part of the field workers. 

How do you suppose the best agents have suc- 
ceeded? Not by the sort of comparisons and at- 
tacks of which we have spoken, but rather by striv- 
ing to convince men of the need of insurance and of 
the danger in which they stand by neglecting to pro- 
cure it. The most successful appeals have been made 
to the heart rather than to the head. 

There are three things in which an agent should 
earnestly believe. They are in the value of life 
insurance as a factor in our modern civilization, in 
the integrity of the system, and in his own company 
and its managers. A mere intellectual acceptance of 



80 TALKS WITH LIFE INSURANCE AGENTS. 

these propositions will not do. It must be that deep 
and abiding faith which will make him work earn- 
estly and persistently. The whole heart must be 
there. There must never be a "give up." It is 
only thus that it is possible to win an extended suc- 
cess in the life insurance field. 

You should remember that there is no class of 
business in which there is not a community of in- 
terest among the various members. They all have 
a common end to attain. The more harmoniously 
they work together the better they succeed. The 
life underwriters recognize this fact, and form strong 
associations at the most important points in the 
country. The result is that a healthier public senti- 
ment has been created, and a larger and better busi- 
ness has been secured than when the hand of every 
agent was against the throat of his neighbor. 

We have called your attention to a few points. 
We leave it for you to determine whether or not 
they are worthy of your consideration. The future 
of the business lies largely in your hands. You 
bring in the proposals for insurance and collect the 
premiums upon the policies when they are issued. 
You work in the field. You appreciate the value 
of the influences of which we have spoken. Now. is 



CONCERNING RIVAL COMPANIES. 81 

it not worth while to do all you can to establish the 
entire interest upon a broad and commanding basis, 
rather than to permit it to degenerate into a series of 
petty wrangles which not only belittle the work, but 
bring rival agents and oflBces into unmerited dis- 
repute ? 



82 TALKS WITH LIFE INSURANCE AGENTS. 

XII. 

CONCERNING ASSESSMENT SOCIETIES. 

Before you have been in the field many weeks, 
you will find that there are assessment organizations 
and natural premium societies, as well as companies 
doing business upon the level premium system. 
To be a master of the situation, you must be ac- 
quainted with their methods of doing business, as 
well as conversant with the principles upon which 
they are based. 

If you examine the annals of the Saxon race, you 
will find that there was a system of protection in 
vogue. In the guilds or " hundreds^^ there were or- 
ganizations in which each of the members were bound 
to contribute an uniform sum in case that any one of 
his fellows came under the ban of the Norman law. 
This may have suggested the assessment basis of life 
insurance. The level premium methods were after- 
wards adopted and made life insurance not only 
scientific but popular. In the year 1868 assessment 
insurance was brought into being and for some 
years flourished vigorously. 



CONCERNING ASSESSMENT SOCIETIES. 83 

At first the system was very crude. A fixed sum, 
usually one dollar or its multiple, was collected from 
each member when a death occurred, and the gross 
amount secured, less a small fee for collecting, was 
paid to the beneficiary. These organizations were 
often social or secret societies. There was also another 
class of assessment associations^, in which agents, em- 
ployed to secure business, were compensated by com- 
missions. Both these systems were mutual in their 
character. 

The earlier methods were crude and inequitable. 
There was no recognition of the fact that a man at 
sixty years of age paid no more than one at thirty. 
To remedy this evil, and to give it at least a sem- 
blance of fairness, assessments were made in accord- 
ance with the probability of dying as given in 
standard tables of mortality. For example, a man — 



ged 


I 25 was assessed 


i( 


30 


(( 


35 


(( 


40 


(t 


45 


i( 


50 


i( 


55 



$ .81 

.84 

.89 

.98 

1.11 

1.38 

1.86 



and so on. When high ages were reached, the assess- 
ment was practically prohibitive. For example, ob 



84 TALKS WITH LIFE INSURANCE AGENTS. 

the foregoing basis, at the age of 75 years it would 
be $9.43, and at the age of 80 years it would be 
$14.45. The burden would be an onerous one if the 
assessments were repeated many times in a single 
year. 

In this system the number of the membership 
varied from month to month, and the amount of the 
assessments paid by each individual varied from year 
to year. The result was that neither the amounts 
paid to the representatives of deceased members, nor 
the amounts paid by individuals to meet such claims, 
were constant. This fact caused both complaint and 
criticism. 

To remedy this difficulty, an arrangement was made 
under which each certificate called for a fixed sum, 
usually $1000 or some multiple thereof, and the as- 
sessments were so graduated as to meet that sum. 
This made the amount of the benefit constant, and 
thus placed the business on a more satisfactory basis. 
Arrangements were also made to collect the payments 
in advance of the occurrence of the loss. 

It can be readily seen that in a society of this 
kind a heavy death rate would be created by the tend- 
ency of the healthy members to withdraw, and of the 
sick and infirm to stay. In time the cost of protection 



CONCERNING ASSESSMENT SOCIETIES. 85 

would be so great as to render the association unprofit- 
able for the man in good health. Hence, its life 
would be limited. A great number of such societies 
have already gone out of existence, and others are 
in a moribund condition. 

The next step was to tie the members to the organi- 
zation by a financial bond. The assessments were in- 
creased from twenty to forty per cent., and a fund 
was thus created which could either be applied to the 
payment of death claims at the discretion of the man- 
agers, or after a certain annual loss rate had been 
reached. The financial interest which every member 
would have in the accumulations of the association 
would tend to bind him to it. This would also check 
the deterioration in the membership. Hence, there 
would be fewer assessments than in the earlier systems 
we have referred to, and the life of the association 
thus would be materially lengthened. 

There are some associations which take more ad- 
vanced ground. For stipulated sums they promise 
to pay a definite amount of insurance, reserving the 
right, in the event of a heavy death rate, to make an 
extra assessment. They create a fund which in some 
respects is analogous to the reserve in the level pre- 
mium system. Such societies, if their business is 



86 TALKS WITH LIFE INSURANCE AGENTS. 

conducted prudently and economically, can expect to 
have a much longer lease of life than those organized 
under the other systems we have named. 

Other things being equal in assessment insurance, 
the society which makes the largest increase in new 
business will have the longest lease of life. The in- 
flux of healthy lives will tend to keep the ratio of the 
actual to the expected death rate within reasonable 
bounds. 

And here we would say that in assessment com- 
panies, as a rule, there is no self-insurance. The 
exception is where the companies have created a fund 
by retaining a small portion of each payment. The 
amount at risk is always the full sum named in the 
certificate, while in the level premium policy it is the 
face of the policy less the reserve. On a whole life 
policy for $1000, issued at the age of forty-five years, 
upon which the payment of premiums is limited to 
ten years, assuming the Actuaries^ Table of Mortality, 
with interest at four per cent., the face of the policy 

During tlie second year is $1000 less reserve, 90.45, or say $909.55 

** fourth '' 1000 '' '' 188.41, '' 811.59 

** '' sixth '' 1000 ** '< 294.92, ** 705.08 

'' '' eighth *' 1000 ** ** 411.29, '' 588.71 

'' '' tenth '' 1000 '* ** 539.31, '' 460.69 

In the event of a heavy loss rate, it can be readily 



CONCERNING ASSESSMENT SOCIETIES. 87 

seen that the level premium office would suiBFer much 
less than the assessment organization. This is a 
strong point in favor of the former. 

In the past, the managers of assessment societies 
have often ignored their own experience, and based 
their illustrations as well as their plans upon that of 
the level premium companies. Now the conditions 
which environ an assessment office are widely differ- 
ent from those which surround a level premium com- 
pany. Consequently the results will not be the same. 
This is pretty clearly shown in the history of The 
United Brethren Mutual Aid Society, of Lebanon, 
Pennsylvania, in which the ratio of the amount of 
claims to the mean amount at risk increased during 
some eighteen years from .75 per cent, to over 4.00 
per cent., while in well-managed level premium offices, 
within the same period, the increase in the correspond- 
ing ratio has hardly been one-fourth of one per cent. 

We regret to state that there appears to be among 
assessment associations a disposition to misuse facts, 
or to state them in such a way as to lead to unjust 
conclusions. 

This is shown by the following citation, which was 
taken from a leaflet issued by a prominent assessment 
organization : — 



88 TALKS WITH LIFE INSURANCE AGENTS. 

'' Cost of an insuraDce of $10,000, at the age of 

35 years, in Assessment Association, in 

comparison with the cost of a policy for the same 
amount in a level premium society : " — 

Assessment. Old Level 

Year. Office. Company. 

1 $90.20 $263.80 

2 71.80 263.80 

3 72.10 263.80 

4 73.50 263.80 

5 . . .... 74.90 263.80 

6 76.40 263.80 

7 . . . . . . 78.00 263.80 

8 79.90 263.80 

9 82.10 263.80 

10 85.00 263.80 

Total . . . $783.90 $2,638.00 

Old line company amount paid . . . $2,638.00 
In assessment association amount paid . 783.90 

Diflference in favor of the assessment society $1,854.10 

A more false and delusive statement could not 
have been made. The costs given by the assess- 
ment society are about three-quarters of the expe- 
rience given by the Actuaries' Table of Mortality, 
with three dollars per thousand for expenses the 
first year, and one dollar each subsequent year. The 
experience is assumed. Nothing in the history of 
assessment associations will justify it. The pro- 



CONCERNING ASSESSMENT SOCIETIES. 89 

vision for expenses is utterly inadequate. No refer- 
ence is made to the fact that the table gives the 
iucreasing cost year by year as the party grows 
older. The probability or possibility of the death 
rate increasing so as to make a much greater number 
of assessments in the future is not in any way recog- 
nized. More favorable loss ratios are claimed than 
have ever been experienced save by one or two old 
line offices. The fact that the payments in the level 
premium companies will be reduced by dividends 
from twenty to thirty per cent., and that the divi- 
dend system will give larger returns of surplus as 
the policy grows older, is kept out of sight ; and the 
fact that at the end of ten years the contract may be 
surrendered for the paid-up insurance of $2681, 
while the assessment certificate is valueless on lapse, 
is not adverted to. Neither is there any reference 
to the moral eifect of the asset accumulations of 
the level premium offices. These facts do not appear 
to be considered worthy of any consideration. 

In level premium offices the policies become non- 
forfeitable after either two or three premiums have 
been paid. The larger portion of lapses occur dur- 
ing or at the end of the first policy years. The gains 
from this source are of necessity small. It is claimed 



90 TALKS WITH LIFE INSURANCE AGENTS. 

that they are large by the advocates of asssessment 
protection. They divide the entire reserve by the 
number of policies in force, and multiply that by 
the number of lapses, and assume the result to be 
gain. From the statement just given the fallacy 
of this claim will be very apparent. Indeed, in 
mutual offices, or those practically so, all gains which 
are made from lapse or surrender inure to the benefit 
of policy-owners. 

Any argument in behalf of assessment societies 
based upon the returns to the Insurance Commis- 
sioners should be looked upon with great suspicion. 
Nine times in ten, if all the facts are ascertained, 
it will be found that the conclusions reached are 
wrong, and those who utter them are often aware 
of this fact. This matter has been referred to at 
length in the Talk upon the use of Insurance Com- 
missioners' Reports, to which the reader is referred. 

A fair conclusion from all attainable facts would 
be that assessment societies, unless they are extra- 
ordinarily thrifty and well managed, cease to be 
desirable avenues through which to secure protec- 
tion for one's family after they have been in exist- 
ence for a period of from twelve to twenty years. 
Their existence may be continued for a longer period, 



CONCERNING ASSESSMENT SOCIETIES. 91 

but a loss rate will probably be experienced which 
will be practically prohibitory so far as new business 
is concerned, unless the system is so arranged as to 
accumulate a fund. 

If those whom you meet wish to protect their 
families in case of death at as low a cost as may 
be, the renewable term policy issued by the level 
premium offices is a desirable contract. It is de- 
fended by a large volume of accumulations — a very 
important fact. In your field work you will find 
this policy a very efficient weapon with which to 
meet the claims of assessment societies. Two things 
you can claim, viz., greater security at an equal or 
lower cost. The more carefully you consider this 
matter, the more apparent this fact will be to you. 



TALKS WITH LIFE INSURANCE AGENTS. 



XIII. 

CONCERNING ANNUITIES AND NET PREMIUMS. 

In order to gain a clear and intelligent notion of 
the system of life insurance, one must begin at the 
foundation, and follow up the computations step by 
step. There are two fundamental assumptions taken 
at the outset. One is, that the rate of mortality will 
be the same as that named in the table of mortality 
which has been adopted ; and the other, that a cer- 
tain per cent, of interest, compounded yearly, will be 
realized upon its investments. A company thus 
organized can pay every claim as it matures, and in 
meeting the last, will use every remaining dollar of 
the accumulated fund. 

If we take the Actuaries^ or Combined Experience 
rate of mortality, which will be found among the 
tables in the Appendix, we shall find that the number 
living and the number dying at every age between the 
ages of ten and ninety-nine are given. To shorten 
the computation, we will take that portion of the 
table which includes the number living and dying at 



CONCERNING ANNUITIES AND NET PREMIUMS. 93 

the age of ninety, and at every subsequent age until 
the limit is reached. It is as follows : — 



Age. 


No. Living. 


No. Dying. 


Age. 


No. Living. 


No. D. 


90 


1319 


427 


95 


89 


52 


91 


892 


322 


96 


37 


24 


92 


570 


231 


97 


13 


9 


93 


339 


155 


98 


4 


3 


94 


184 


95 


99 


1 


1 



The first step is to ascertain the present value of an 
annuity of one dollar at the age of ninety years, upon 
the foregoing table of roortality, with interest at four 
per cent., the first payment of which is to be made at 
once. This is equal to the payment for the first year, 
together with the present value of all future payments. 

If thirteen hundred and nineteen persons were each 
to receive a payment of one dollar at the commence- 
ment of every year during the remainder of life, the 
first payment, being made at once, is evidently equal 
to $1319. At the commencement of the ninety-first 
year there would be but eight hundred and ninety- 
two of the thirteen hundred and nineteen persons 
alive; hence, but $892 would be paid. If, at the 
commencement of this year, the company were to 
make an adjustment for both years, it would pay, in 
addition to the $1319 then due, a sum which, im- 
proved at the assumed rate of interest, would amount 
at the end of one year to $892 ; or, in other words. 
Its present worth. As every one of the annuitants 



94 



TALKS WITH LIFE INSURANCE AGENTS. 



has an equal claim upon this sum, it must be divided 
into thirteen hundred and nineteen parts. The share 
of each would be the present worth of ^^^^ of one 
dollar, or -^^^ of unity, multiplied into the present 
value, one dollar, payable at the end of one year. At 
the beginning of the third year, there would be but 
five hundred and seventy of the thirteen hundred and 
nineteen living; consequently, but $570 would be 
paid. Commuting this payment at the commence- 
ment of the ninetieth year, the share of each one would 
be 3^^ of unity, multiplied into the present value 
of one dollar, payable two years hence. The present 
worth of all payments ascertained in this manner 
constitutes the value of a life annuity. 

This process is completed in the following table : — 



Age, 



Ninety. 



Age. Number 


Probability 


Present -worth 




Present worth of 


Living. 


of Living. 


of One Dollar. 




each Payment. 


90 1319 


ifH 


X 


$1.00000000 


= 


$1.0000000 


91 892 


t¥A 


X 


.96153846 


= 


.6502536 


92 570 


tVA 


X 


.92455625 


= 


.3995429 


93 339 


t¥A 


X 


.88899636 


= 


.2284885 


94 184 


t¥A 


X 


.85480419 


= 


.1192448 


95 89 


tH^ 


X 


.82192711 


= 


.0554598 


96 37 


tH^ 


X 


.79031353 


= 


.0221696 


97 13 


lih 


X 


.75991781 


= 


.0074897 


98 4 


i/ra- 


X 


.73069020 


= 


.0022168 


99 1 


T3T9 


X 


.70258674 


= 


.0005326 


Present value of an Annuity of One Dollar, 


$2.4853983 


A deferred 


annuity is 


one in which the payments 



OONCERNINQ ANNUITIES AND NET PREMIUMS, 95 

are to begin at some future specified date. Its value 
is the present worth of the payment at the com- 
mencement of the year, and of all subsequent pay- 
ments. For example, the value at the age of ninety 
years of an annuity of one dollar, the first payment 
of which is to begin at the age of ninety-five, is the 
sum of the last five amounts given in the right hand 
column of the foregoing table, or, say $.0878674. 

A temporary annuity is one which continues for a 
specified number of years, and then ceases. The value 
of an annuity of one dollar issued at the age of ninety 
years, and to continue until five annual payments 
are received, the first of which is to be immediate, is 
the sum of the first five amounts given in the foregoing 
table, or $2.3975308. The value of the temporary 
annuity and the deferred constitute the value of an 
annuity for the whole life, or say — 

$2.3975308 + $.0878674 = $2.4853982. 

The deferred annuity may be paid for by a net 
single premium, or by any number of net annual 
premiums, less than the number of years which the 
initial premium is forborne. If by five annual pre- 
miums, the first of which is to be made at the begin- 
ning of the ninetieth year, such a sum must be taken 
annually as will, making due allowance for the 
chances of discontinuance, give a present value equal 



96 TALKS WITH LIFE INSURANCE AGENTS. 

to the net single premium, or, say $.0878674. As 
we have already shown, the present value of a tem- 
porary annuity of one dollar for the ninetieth and the 
four subsequent years is |2.3976308. This amount 
holds the same relation to one dollar that $.0878674, 
the single premium of the deferred annuity, does to 
the annual premium ; that is to say — 

$2.3975308 : $1 : : $.0878674 : .03664449. 

The next step will be to ascertain the amount of 
the net single premium on a whole life policy of one 
dollar. 

According to the Rate of mortality, four hundred 
and twenty-seven, out of thirteen hundred and nine- 
teen persons living at the age of ninety, will die with- 
in one year. If each one were assured for one dollar, 
and the losses adjusted at the end of the year, $427 
would then be due, and the share of each assurant 
entered at the commencement of the year would be 
jif^th part of the $427, or ^^^ of one dollar. If 
the payment of the premium is made at the be- 
ginning of the year, such a sum must be taken as 
will, improved at the assumed rate of interest, be 
equal to $427 at the end of the year, or, in other 
words, its present value ; and the share of each assur- 
ant will be -^-^ of unity multiplied by the present 
value of one dollar, payable one year hence. During 



CJONCERNINQ ANNUITIES AND NET PREMIUMS. 97 

the second year three hundred and twenty-two will 
. die. If the whole number living at the commence- 
ment of the ninetieth year were assured for two years, 
paying the assessment of both years at the outset, the 
whole amount due would be the present value of 
$427, payable in one year, plus the present value of 
$322, payable in two years. The share of each as- 
surant would be xVtV ^^ ^^^^Jy naultiplied into the 
present value of one dollar, payable in one year, 
added to -^-^q of unity, multiplied into the value of 
one dollar, payable in two years. Adjusting in this 
manner, at the commencement of the ninetieth year, 
all losses for the remainder of life, the share of each 
one will be the net single premium. This is always 
equal to the present value of each individual's share 
of the amount paid for losses at the end of the first, 
and of every subsequent year. 

We have completed this process in the table below : 







Age. 


> • • 


. Ninety. 






Ige 


Number 


Probability 


Present value of 


■ Present value of each 




Dying. 


of Dying. 




One Dollar. 




Year's Payment. 


90 


427 


tVA 


X 


$.96153846 


== 


$.3112788 


91 


322 


tVA 


X 


.92455621 


= 


.2257067 


92 


231 


-^/tV 


X 


.88899636 


= 


.1556922 


93 


155 


t'/A 


X 


.85480419 


= 


.1004507 


94 


95 


tH? 


X 


.82192711 


= 


.0591868 


95 


52 


jih 


X 


.79031453 


= 


.0311572 


96 


24 


Tfh 


X 


.75991781 


:^ 


.0138272 


07 


9 


TTT^ 


X 


.73069020 


= 


.0049857 


98 


3 


TaTy 


X 


.70258674 


= 


.0015980 


99 


1 


TTT7 . 


X 


.67556417 


= 


.0005122 



Net single premium for one doUar, $.9043955 



98 TALKS WITH LIFE INSURANCE AGENTS. 

The present value of a life annuity of one dollar 
is equal to the present worth of one dollar per annum, 
to be received at the beginning of each year during 
life. The net annual premium is such an amount 
paid at the beginning of each year, that the present 
value of the first and all subsequent premiums shall 
be equal to the net single premium. As the value of 
a life annuity is the present worth of a certain sum 
to be received at the beginning of each year, so the 
net single premium is the present worth of all the 
net annual premiums. Hence, the present value of 
an annuity of one dollar holds the same relation to 
one dollar that the net single premium for one dollar 
holds to the net annual premium. Taking the value 
of an annuity of one dollar, and the net single pre- 
mium for one dollar already obtained, and we have 
the following proportion : — 

As the present value of the annuity is to one dollar, 
so is the net single premium to the net annual pre- 
mium ; or — 

$2.4853983 : |1 : : .9043955 : .36388312 

The fourth term is the net annual premium for 
whole life assurance. It is, owing to loss of decimals, 
a little less than it should have been. The premium, 
more exactly, at this age is $.36388844; conse- 



CONCERNING ANNUITIES AND NET PREMIUMS. 99 

quently, the premium for one thousand dollars will 
be $363.88844. 

The correctness of this process is susceptible of 
proof. If we take at the end of each year from the 
fund made up from the premiums for the year, and 
the balance from preceding years, improved at four 
per cent., the amount of losses paid, we can meet 
every claim as it matures, and at the end of the 
ninety-ninth year, upon the payment of the last loss, 
the fund will be exhausted. 

The net single premium for a temporary insurance 
of one dollar is the sum of the first five amounts in 
the last foregoing table, or, say .8523152, and the 
corresponding annual premium is found by the follow- 
ing proportion : As the value of a temporary annuity 
of one dollar is to one dollar, so the net single pre- 
mium is to the net annual premium ; or, say — 
$2.3975308 : $1 :: .8525152 : .355530. 

The net annual premium limited to a stipulated 
number of years for a whole life insurance, is found 
by the following proportion. As the value of a tem- 
porary annuity of one dollar for the number of years 
to which the payment of premiums is limited, the first 
payment of which is immediate, is to one dollar, so is 
the net single premium for a whole life insurance of 



100 TALKS WITH LIFE INSURANCE AGENTS. 

one dollar, to the net annual premium. Thus, the 
net annual premium for a whole life insurance at 
the age of ninety years, the consideration for which 
is limited to five annual premiums, is given in the 
following statement : — 

$2.395308 : $1 : : $.904395 : $.377569. 
A pure endowment policy is a contract in which 
the office, in consideration of a single premium paid 
at the outset, enters into an engagement to pay a stip- 
ulated sum at a fixed future date, provided a certain 
person named in the obligation is then alive. If, to a 
person aged ninety years, a pure endowment of one 
dollar, payable in five years was issued, the premium 
could readily be found by the following process : — 

Referring to the Actuaries' Rate of Mortality, at the 
age of ninety years we find that 1319 persons are alive. 
At the age of ninety-five, or five years later, there are 
only 89 of these persons alive. Of course, a fund of 
$89 must be on hand at the end of five years. The 
individual contribution will be jxiT ^^ $^^ y ^^j ^^7 
$.0674750. But the premiums paid will, upon the 
assumption taken, bear interest at four per cent, com- 
pounded. Hence, the owner of each policy must pay 
such a sum as will, put at interest at four per cent., 
amount to $.0674750, or, in other words, its present 



CONCERNING ANNUITIES AND NET PREMIUMS. 101 

worth. The vahie of one dollar, payable five years 
hence, is $.8219271. Hence, the net single premium 
required would be $.0674750 X $.8219271, or, say 
$.0554596. 

As we have already seen, the value of a temporary 
annuity for five years, at the age of ninety years, is 
$2.3975308. Hence the proportion : As the value 
of the five years' temporary annuity of one dollar is 
to one dollar, so is the net single premium to the net 
annual premium, or — 

$2.395308 : $1 : : $.0554496 : $.0231319. 

The endowment insurance premium consists of two 
parts, the pure endowment premium and the pre- 
mium for temporary insurance. They may be found 
separately and brought together, as shown in the fol- 
lowing illustration. On a policy of one dollar — 

Net single premium for pure endowment for five 

years, at age of 90 years $.0554596 

Net single premium for five years' temporary insur- 
ance at age of 90 years 8523152 

Net single premium for endowment insurance at age 

of 90 years 9077748 

Referring to a previous page, we find that the 

Net annual premium for five years' temporary insur- 
ance of $1, age 90 years is 3555301 

And that the net annual premium for a pure endow- 
ment for five years, beginning at age 90, is . .0231319 

Hence the net annual premium for an endowment 

insurance at age 90 is 378662 



102 TALKS WITH LIFE INSURANCE AGENfTS. 

This net annual premium may also be found by 
the following proportion : As the temporary annuity 
of one dollar is to one dollar, so is the single pre- 
mium for one dollar to the net annual premium re- 
quired — 

$2.3975308 : $1 : : $.9077448 : $.378662. 

In this talk we have dealt with the net premiums 
for annuities, insurance, and endowments, as a full 
understanding of this subject is necessary to enable 
you to comprehend the explanations which are given 
on the following pages. 



CONCERNING RESERVES. 103 



XIV. 

CONCERNING RESERVES. 

In discussions about life insurance matters, you 
will find that the term " the reserve^^ is used about 
as often as that of ^^ the premium/^ They both 
represent determinate quantities, the latter of which, 
with the yearly interest added, includes the former. 

It is a matter of almost common knowledge that 
the life insurance premium can be divided into three 
parts, one of which is set 'aside for expenses, another 
for insuring the risk, and a third, which is known as 
" the reserve,^^ for accumulation. 

In the last chapter, we stated the assumption upon 
which the business of life underwriting is founded, 
and showed by arithmetical illustrations simple me- 
thods of premium computation. To the rate thus 
found is added a margin or loading for expenses of 
from twenty to forty per cent. This furnishes what 
is usually known as the gross or office premium. 

Assuming that the provision for expenses is all 
used for that purpose, it will be easy to see by re- 



104 



TALKS WITH LITE INSURANCE AGENTS. 



ferring to the table of mortality that the uniform or 
level net premium must insure a constantly increas- 
ing risk, and that a portion of the premiums received 
during the earlier years must be used to pay the 
larger losses which must occur during the later. This 
can be well shown in an illustration. At the age of 
fifty years the net or mathematical premium for $1000 
of ordinary whole life insurance, upon Actuaries' Rate 
of Mortality, with four per cent, compound interest, 
is 135.78. If against this sum we place the normal 
yearly cost of insurances, or the price of insuring the 
risk together with the reserve at the end of the year, 
we shall have the following table : — 



5th year 
10th '' 






Net 
Premium. 

. $35.78 

. 35.78 


Cost of 
Insurance. 

$18.06 

21.83 


Terminal 
Reserve. 

$110.79 

226.84 


15th ** 
20th '' 
21st ** 
22d " 






. 35.78 
. 35.78 
. 35.78 
. 35.78 


26.78 
32.64 
33.87 
35.10 


344.07 
456.79 

478.40 
499.64 


23d '' 
24th ** 






. 35.78 
. 35.78 


36.35 
37.59 


520.48 
540.92 


25th ** 






. 35.78 


38.84 


560.91 


30th '' 






. 35.78 


45.00 


654.00 


35 th ** 
40th '' 






. 35.78 
. 35.78 


49.90 
53.94 


736.93 
815.50 


45th ** 
46th " 






. 35.78 
. 35.78 


60.72 
63.40 


882.38 
891.48 


47th *' 






. 35.78 


65.82 


898.52 


48th ** , 






. 35.78 


63.75 


907.92 



CONCERNING RESERVES. 105 

A cursory examination of the table will show that 
the premium received is sufficient to pay the normal 
cost of insurance up to and including the 22d year. 
In the 23d year there is a shortage of 57 cents. It 
reaches the maximum point in the 47th year, when 
the shortage is $30.04. The cost of insurance for 
the full $1000 is not given, but of $1000 less the 
reserve or self-insurance. This is called the amount 
at risk. We have explained this subject at length in 
Talk XV., to which we would refer the reader. 

If we examine the Actuaries' Rate of Mortality, 
we shall find that out of 100,000 living at the age 
of 10 years there will be but 69,517 survivors at 
the age of 50 years. Of these, 1108 will die during 
the next twelve months, leaving 68,409 alive at the 
age of 51 years. Before the age of 52 is reached, 1156 
will pass away, leaving but 67,253 at the beginning 
of the 52d year. Now the net annual premium for 
an ordinary whole life policy entered at the age of 
50 years is $35.78, as we have already seen. Suppose 
that 69,517 persons aged 50 years should each pay 
the company $35.78 for $1000 of insurance, that 
the losses be paid at the end of the year in which 
they occur, and that money earns four per cent, from 



106 TALKS WITH LIFE INSURANCE AGENTS. 

the moment it comes into the company^s hands, and 

we shall have the following statement : — 

69,517 premiums of $35.78 are . . $2,487,317.00 

Add 4 per cent, interest . . . 99,493.00 

A total of 2,586,810.00 

Deduct 1108 losses of $1000 each . 1,108,000.00 

And we have 1,478,810.00 

Divide last sum by 68,409, the number 

living at age 51 21.61 

This is the amount which each insurant has con- 
tributed to the common fund and is the reserve or 
the net value of his policy at the end of the first 
year. 

Let us continue the account. You will remember 
that the entire amount of the fund was : — 

At the end of the first year . . . $1,478,410.00 

There were 68,409 persons living at age 
51, hence we add 68,409 premiums of 
$35.78 each — the amount received by 
company, or, say, .... 2,447,674.00 

Making a total of 3,926,084.00 

Add 4 per cent, interest . . . 157,043.00 

And we have 4,083,127.00 

There will die during the year 1156 per- 
sons, hence we deduct for death claims 1,156,000.00 

Leaving a balance of ... . 2,927,543.00 

Divide this sum by 67,253, the number 
of persons living at age 52, and we have 43.51 

as each individual portion. This is the reserve or 
net value at the end of the second year. By a 



CONCERNING RESERVES. 107 

similar process we could find the reserve for the 
third, fourth, and every other year, until the end of 
the table is reached. 

By this same method the reserve on any of the 
forms of life or endowment policies can be reached. 
In practice, however, shorter processes are used ; but, 
as these involve the construction of preliminary and 
intermediate tables, they are not so easily explained. 
Those desiring fuller information in regard to this 
matter are referred to any standard treatise upon pre- 
miums and annuities. 

There are in practice what are known as the initial 
and terminal reserve ; the former is the value at the 
beginning, and the latter at the end of the year. For 
example, the moment that a policy is written at the 
age of 50 years the initial reserve is the net premium, 
or, as we have seen, $35.78, while the terminal re- 
serve is $21.62. The difference in these values would 
be $14.16. This divided by 12 gives $1.18. The 
value at the beginning of the year is $35.78. Con- 
sequently — 

When it is one month old the value is $1.18 less, or, say, $34.60 
*' '' two months" " *^ '' 1.18 '' '' "• 33.42 
"■ " three *' "• " *' '' 1.18 '' '* *< 32.24 



108 TALKS WITH LIFE INSURANCE AOENTS. 

and so on until the end of the twelfth month is 
reached, when we have $21.62, or the net value. 

The initial value at the beginning of the second 
year is obtained by adding the net premium to the 
terminal reserve at the end of the first year. The 
value will be, therefore, $21.62 + $35.78, or, say, 
$57.40. The terminal value at the end of the 
second year is, as we have seen, $43.53. The dif- 
ference in these values is $57.40 less $43.53, or, say, 
$13.87. This difference divided into twelve parts 
will enable us, by the foregoing process, to find the 
value at the beginning of every month in the policy 
year. It is manifest that we can find the daily dif- 
ference by dividing the monthly into 30 parts. You 
will readily see that the policy has a value for every 
day in the year, which can be readily found. The 
tables which are used by companies and Insurance 
Departments are made in the manner just suggested, 
and the values given either at the beginning or mid- 
dle of the month. The original 4 per cent, valua- 
tion tables constructed by Hon. Elizur Wright were 
made upon the former method, while in the tables 
constructed by the joint work of the New York and 
Massachusetts Insurance Departments, the latter plan 
is used. 



CONCERNING RESERVES. 109 

In practical work it is customary to value each 
policy in force to the nearest month. The value is 
usually taken at the nearest dollar. This method 
has been found to be sufficiently accurate in practice, 
and the labor of computation is thereby considerably 
lessened. 



no TALKS WITH LIFE INSURANCE AGENTS. 



XV. 

CONCERNING COST OF INSURANCE, AND THE 
GAINS FROM VITALITY AND INTEREST AND 
PREMIUM LOADINGS. 

We have already referred to the fact that the com- 
pany never insures the full amount named in the 
policy, but always that amount less the reserve, 
which is said to be the amount of the self-insurance. 
This reduction in the amount at risk was pretty 
clearly shown in our last talk. At the age of fifty 
years, the reserve on an ordinary whole life policy 
at the end of the first year is $21.61. Hence the 
amount of risk is $1000 less $21.61, or say $978.39. 
Now the cost of insuring one dollar at age fifty, the 
loss payable at the end of the year, is the fraction in 
which the number dying at the age of fifty years is 
the numerator and the number living at that age is 
the denominator, multiplied by the monetary unit, 
or, say 1108 divided by 69.517, multiplied by one 
dollar. This is equal to $0.015939. Now if we mul- 
tiply the number of monetary units in the amount at 
risk, 978.39 by $0.015939, the cost of insuring one 
dollar, we will have $15.60 as the cost of insurance. 

The result can be reached in another way. If 



CONCERNING COST OF INSURANCE. Ill 

to the reserve at the beginning of the year we add 

interest at the rate of four per cent., and from this 

amount deduct the reserve at the end of the year, 

we shall have the cost of insurance. For example, 

on the policy under consideration : — 

The reserve at the begiuning of the first year is $35.78 
Add four per cent 1.43 

'Making a total of $37.21 

Deduct terminal reserve 21.61 ^ 



Leaves balance as cost of insurance . $15.60 

The effect of the reduction of the amount at risk 
upon the cost of insurance is sometimes very remark- 
able. We give, by way of illustration, a ten-year 
endowment insurance policy for $1000, issued at the 
age of fifty years. We also indicate in the table 
below the reserve thereon, the amount at risk, the 
cost of insuring the amount at risk, and the cost of 
insuring the full face of the policy : — 



ear. 


Face of 
policy. 


Reserve. 


Amount 
at risk. 


Cost of 
insuring 
amount 
at risk. 


Cost of 

insuring 

$1000. 


1 


$1000 


$78.56 


$929.44 


$14.69 


$15.94 


2 


1000 


160.76 


839.24 


14.18 


16.84 


3 


1000 


246.92 


753.08 


13.52 


17.95 


4 


1000 


337.39 


662.61 


12.65 


19.09 


5 


1000 


432.60 


567.40 


11.53 


20.31 


6 


1000 


533.03 


466.97 


10.12 


21.96 


7 


1000 


639.25 


360.75 


8.36 


23.13 


8 


1000 


751.92 


248.08 


6.12 


24.68 


9 


1000 


871.88 


128.12 


3.08 


26.39 



10 1000 1,000.00 000.00 0.00 28.24 



112 TALKS WITH LIFE INSURANCE AGENTS. 

When a company has a large volume of endow- 
ment insurance, or a large volume of paid-up insur- 
ance, or of ordinary whole life insurance by equal 
annual premiums till death, which has been in 
force for a considerable number of years, the amount 
of risk is materially reduced. This is important in 
case of a heavy loss rate. This will be apparent 
upon a cursory examination of the three right-hand 
columns in the foregoing table. It also shows, as 
we have already stated, one reason why a level pre- 
mium office is much more stable than either an assess- 
ment or a natural premium company. 

You will hear much said about vitality gains. 
These arise from losses being less in amount than 
was expected from the table of mortality upon which 
the company cast its premiums. We showed you in 
the foregoing illustration how the cost of insurance 
was computed. There are tables in use in which 
this is given upon all the forms of policy in general 
use for every year and at every age. The actuary 
at the end of every fiscal year computes this cost on 
all the policies, either individually or by groups. 
The aggregate of these costs is the loss expectation 
for the year. 

The actual losses are next ascertained. The aggre- 



CONCERNING COST OF INSURANCE. 113 

gate amounts paid to the representatives of the de- 
ceased insurants under their policies is ascertained, 
and the terminal reserves upon such policies at the 
end of the policy year in which death occurs is 
deducted therefrom. The remainder is the net loss. 

For example, the expected loss is perhaps $500,- 
000. The actual loss as estimated by the actuary is 
$400,000. The gain is $100,000. This can be 
passed over to the surplus account. In such a case 
the gain from vitality is said to be twenty per cent., 
and the ratio of the actual to the expected loss is 
said to be eighty per cent. 

On the other hand, if the amount of claims expected 
are $500,000 and those realized are $600,000, there is 
a loss of $100,000. The losses are said in such a 
case to be one hundred and twenty per cent, of the 
table, or to be twenty per cent, in excess. We are 
glad to say that among the companies doing an 
active business at the present time, we do not know of 
one in which the actual losses have for a term of years 
exceeded the tabular expectation. The rate is usu- 
ally between sixty and ninety per cent., varying 
somewhat in the different offices, as well as in the 
same offices from year to year. 

We told you in an earlier talk that in all life insur- 



114 TALKS WITH LIFE INSURANCE AGENTS. 

ance computations money was assumed to earn a 
certain per cent, at compound interest. This was 
formerly taken at four per cent, with one or two ex- 
ceptions in all American offices and in nearly all the 
States in which an insurance department is established, 
but in recent years three and one-half per cent, 
has been made the standard. 

Assume that four per cent, fulfills the interest re- 
quirement in the computation. Suppose money earns 
five and one-half per cent, above the cost of paying for 
the investment. The gain is evidently one and one- 
half per cent, on the initial reserve. To this must 
be added interest on the surplus at the rate of five 
and one-half per cent. It will be readily seen that 
in such a case, as the reserve in the individual policy 
increases, the contribution from interest will also in- 
crease. This fact explains why dividends grow larger 
as the policy grows older. 

There is another source of gain to which we would 
call your attention. To the net or mathematical pre- 
mium a certain amount is added to provide for ex- 
penses. In American offices this varies from twenty- 
four to forty per cent, of such premiums. At age 
fifty the rate charged by a dozen or more offices for 
participating insurance by equal annual premiums till 



CONCERNING COST OF INSURANCE. 115 

death is $47.18 per 1000. As we have seen, the net 
premium upon Actuaries^ Rate of Mortality at four 
per cent, interest is $35.78. This leaves ($47.18- 
$35.78) for expenses $11.40. A similar provision is 
made in ease of every policy issued by the company. 
An aggregate of these sums, which are known as the 
premium loading, constitutes the allowance which is 
made for the conduct of the business. This is com- 
puted by the actuary, and should be a guide to the 
management. Under no circumstances should the 
company in the strife for business exceed the limit 
which is thus fixed. As a rule, it will be found that 
in well-organized offices only a portion of this fund 
is used. The balance, together with the gains from 
vitality and interest, should, after making proper al- 
lowance for adverse contingencies at the end of stipu- 
lated periods, be paid back to the policy-owner. 

There are gains from other sources, such as sur- 
render values, lapses, and appreciation in value of 
securities. The gain from the two former of these 
sources might be placed in what could be termed 
the construction account. It will be a fair set-off 
against the impairment of the aggregate vitality of 
the company by the withdrawal of healthy lives. 
Companies should be very careful to husband the gain 



116 TALKS WITH LIFE INSURANCE AGENTS. 

which arises from the advance in the value of securities, 
as it may happen that a provision will have to be 
made in the future for their depreciation. 

Gains from interest and from loading may properly 
be returned to the insured. A portion of the gains 
from vitality should be set aside. It is more than 
possible, when the volume of insurance withdrawn 
by death exceeds the amount of new insurance placed 
upon the books, that the rates of the actual to the ex- 
pected loss rate will increase. To secure that stability 
and certainty which render life insurance valuable it 
would be wise for every company to provide against 
such a contingency. 



CONCERNING SURPLUS AND DIVIDENDS. 117 



XVI. 

CONCERNING SURPLUS AND DIVIDENDS TO 
POLICY-HOLDERS. 

Very early in your experience as a life insurance 
solicitor you will find that what are called dividends 
to policy-holders will furnish a theme for almost end- 
less discussion. You will learn that by the applica- 
tion of the surplus the premiums are materially 
diminished or the insurance largely increased. Of 
course, other things being equal, the offices which 
make the largest returns of this sort are the most 
desirable ones in which to insure. 

And here we would say that the term dividends, 
as applied to the apportionment and the return of 
surplus in a mutual company, or in one practically 
so, is a misnomer. There are no earnings in the 
sense in which the term is usually applied to cor- 
porations. The fact is that the insured has paid 
the company more money than was actually needed, 
and that this over-payment, or a portion of it, is 
returned to him periodically. 

If you investigate the matter, you will find that 



118 TALKS WITH LIFE INSURANCE AGENTS. 

the surplus in a life insurance ofl&ce arises from four 
sources, viz. : — 

First By the expenses being less than the pro- 
vision made for them in the premium loading. For 
example, the net or mathematical premium at the age 
of forty years upon the Actuaries^ Eate of Mortality, 
with four per cent, interest, for whole life insurance 
by equal annual payments during life, is $23.68 per 
$1000. Thirty-three per cent, of this premium is 
added to meet expenses. Hence we have — 

The premium at $23.68 

Thirty-three per cent, of this sum . . 7.81 
Making the gross office premium . . 31.49 

The provision for expense, as you can readily see, 
is $7.81. 

In the case just given if the expenses were 15 per 
cent, of the office premium, or, say $4.72, the gain 
from loading would be $7.81 less $4.72, or, say $3.09, 
and whatever this may earn during the year at the 
average rate realized by the company's investments. 

Second. By the actual losses being less than those 
expected by the table. In the illustration we have 
given above, if the actual losses for the year charge- 
able by the law of average to the policy were $7.67, 
or three-quarters of $10.22, the tabular rate, the gain 
would be $10.22 less $7.67, or, say $2.55. 



CONCERNINQ SURPLUS AND DIVIDENDS. 119 

Third. From the rate of interest actually realized 
on the company's investments being larger than used 
in computing the premium. If the assumed rate 
was four per cent., and the actual rate was six per 
cent., the difference of two per cent, would be sur- 
plus. In the case stated the reserve at the begin- 
ning of the first year was $23.68. The gain would 
be two per cent, of this sum, or about forty-seven 
cents. To this sum must be added the interest on 
$3.09, the unexpended portion of the premium 
loading at six per cent., or, say |0.19, making $0.66, 
the entire sum. 

Fourth. From extraneous sources, such as appre- 
ciation in value of securities, gains from lapses, 
surrenders, etc. 

The gains from the four sources we have named 
run up to considerable sums amounting in American 
oflSces, speaking approximately, to considerably over 
one hundred million dollars annually. As you may 
readily see, this is a very important matter to 
the policy-holders, as it reduces the amount of the 
premiums which he has to pay, or increases the 
amount of his insurance. 

Formerly the surplus was apportioned by giving 
to each policy-holder a uniform per cent, of the 



120 TALKS WITH LIFE INSURANCE AGENTS. 

premium as a dividend. This had the merit of 
simplicity, but it did a gross injustice between the 
policies of the earlier and the later issues. What is 
known as the contribution system was introduced by 
Mr. Sheppard Romans, then actuary of The Mutual 
Life Insurance Company, of New York. In its for- 
mulation he was materially aided by Mr. David P. 
Fackler, who was at that time his assistant, and 
who suggested several important elements. This 
system is practically an open credit and debit be- 
tween the policy-holder and the company, in which 
he is credited with what he pays and charged with 
his portion of the expense, the necessary reserve, and 
the cost of insurance. The balance, if any, is the 
surplus belonging to the policy. 

We will show how this can be done in an illus- 
tration. We will take the example given above at 
the age of forty years, and assume that the expenses 
are fifteen per cent, of the premium, and that the 
cost of insurance is three-fourths of that given in 
the table of mortality and interest on the funds at 
six per cent. We therefore have as the effective 
premium $31.49 less $4.72, or, say, $26.77. The 
cost of insurance would be $7.67 for the first policy 
and $7.73 for the second policy year. We now have 
the following statement of the account : — 



OONCERNINQ SURPLUS AND DIVIDENDS. 



121 



First Year. 



Cr. 
By Premium less ex- 
pense .... $26.77 
By Interest on the same 1.60 



Total of 



. $28.37 



Dr. 

To Cost of insurance . $7.67 

To Reserve end of year 14.41 

To Surplus to balance . 6.29 



Total of 



$28.37 



Assuming that the entire surplus is returned to 
the policy-holder at the end of the year, the account 
will be as follows : — 



Cr. 

By Reserve from end 1st 

year $26.77 

By Premium for year . 14.41 
By Interest on premium 

and reserve . . 2.47 



Second Year. 
Dr. 



Total of 



$43.65 



To Cost of insurance . $7.73 
To reserve end 2d year 29.31 



To Surplus to balance 6.61 
Total of . . . $43.65 



If the surplus had not been withdrawn at the end 
of the first year, the amount of surplus at the end 
of the second year would have been increased by the 
amount of surplus at the end of the first year with 
six per cent, interest thereon. The surplus at the 
end of the second year would, speaking approxi- 
mately, in such case be ($6.29 x $1.06) + $6.61, or, 
say, to $13.28 altogether. 

We have perhaps said suflScient to illustrate the 
general theory upon which dividends are cast. As 



122 TALKS WITH LIFE INSURANCE AGENTS. 

you go on in the work you will find that while the 
principles used in determining the surplus are fully 
recognized, companies differ very widely in their ideas 
of apportioning it. It is not often that all the gains 
created are distributed. It is considered wise to 
hold a portion. Hence we have the divided and the 
undivided surplus. The latter is needed, as we have 
already stated, to give stability by providing for an 
excessive loss rate or for shortage in investments. 
This tendency, with the decline of the interest rate, 
has been to increase the per cent, of surplus. 

As we have said, there is a wide divergence in the 
practice of paying dividends. They may be 

Made available at the end of one year and at the 
end of every year thereafter, or 

At the end of two years and at the end of every 
year thereafter, or 

At the end of every five years, 

At the end of every ten years, 

At the end of fift^een or twenty years and annually 
thereafter. 

These are severally known as annual, deferred, and 
accumulative dividends. The eflfect of accumulative 
element is very noticeable in dividends which are 
deferred for five years or more. 

Dividends may be paid in cash ; may be used to 



CONCERNING SURPLUS AND DIVIDENDS. 123 

increase the amount of the insurance ; to reduce the 
next subsequent premium ; to reduce all subsequent 
premiums, or to purchase a life annuity. In many 
offices which issue deferred dividend policies you will 
observe that at the end of the dividend period the 
insured has the right, upon the surrender of his 
contract, to withdraw both the surplus and reserve 
from the company in cash. You will often find that 
two, three, or even more of the systems we have 
named are used in the same company. 

We have sought to give or to suggest the informa- 
tion concerning dividends which will be needed in 
ordinary field work. You should endeavor to ascer- 
tain where the surplus comes from, and to get an idea 
as to the methods used in its apportionment. Espe- 
cially should you endeavor to grasp the systems used 
by your own office and by the rival offices whose 
agents you may meet. You should also remember 
that the amount of dividends already paid must not 
be used as a pledge for the amount of those which 
will be paid in the future. The results of each com- 
pany's work must depend upon its future experience 
in respect to interest, losses, expenses, lapses, etc. — 
things the effect of which cannot be predicted. It 
is important that you should remember and be guided 
by this fact. 



124 TALKS WITH LIFE INSURANCE AGENTS. 



XVII. 

CONCERNING NON-FORFEITABLE PLANS. 

You will find very early in your underwriting expe* 
rience that the various forms of what are termed non- 
forfeitable insurance are constantly brought to the 
front. Indeed there is no phase of the entire work 
that commands more attention at the hands of the 
community. 

This whole system is based upon the idea that out of 
the premiums paid a reserve has been kept, which, it is 
claimed, it would be unjust to confiscate in case of 
either lapse or withdrawal. The broad position was 
taken that some fair forms of adjustment between 
the retiring policy holders and the companies should 
be had. 

The first non-forfeitable insurance was, we believe, 
written by the New York Life Insurance Company in 
1859. At that time it began to issue a form of whole 
life poHcy with the payment of premiums limited to ten 
years. This contract, known as the ten-year life 
policy, contained a provision that it should become 



CONCERNING NON-FORFEITABLE PLANS. 125 

a paid-up policy for as many tenth parts of the orig- 
inal sum insured as the company had received annual 
premiums. No surrender of the policy was required, 
hence no rights could be forfeited by ignorance or 
neglect. 

In the year 1861, at the suggestion of Mr. Elizur 
Wright, the legislature of Massachusetts passed a non- 
forfeiture law which afterwards became famous. It 
provided that eighty per cent, of the reserve based upon 
the Actuaries' Rate of Mortality, with interest at four 
per cent., should be taken as a net single premium for 
temporary insurance, and that the policy should be con- 
tinued in force for the full amount for as long a term as 
such net single premium would carry it upon the table 
of mortality and rate of interest just named. If there 
were any outstanding notes or other obligations against 
the policy, they were to be deducted from the reserve 
and eighty per cent, of the balance should then be 
taken as a net single premium of temporary insurance 
as above stated. In case of death the forborne pre- 
miums and six per cent interest thereon, or those 
which would have been paid had there been no 
default, were to be deducted from the amount of the 
insurance. The practical operation of the law is 
shown by the following table, in which the period of the 



126 TALKS WITH LIFE INSURANCE AGENTS. 

extensions of the insurance is given at ages 35, 40, 45 
and 49 : 

Number Annual Age 35. Age 40. Age 45. Age 49. 

Premiums Paid. Years. Days. Years. Days. Years. Days. Years. Days. 



1 


1 


3 


1 


49 


1 


161 


1 


32 


2 


2 


12 


2 


96 


2 


86 


2 


24 


3 


3 


27 


3 


125 


3 


75 


2 


340 


4 


4 


46 


4 


123 


4 


26 


3 


153 


6 


5 


56 


5 


86 


4 


306 


4 


131 


6 


6 


41 


6 


16 


5 


184 


4 


342 


7 


6 


359 


6 


276 


6 


34 


5 


156 


8 


7 


280 


7 


139 


6 


217 


5 


306 


9 


8 


167 


7 


337 


7 


75 


6 


65 


10 


9 


24 


8 


141 


7 


136 


6 


164 


15 


10 


359 


9 


258 


8 


83 


7 


11 



The principal provisions of this law were at one time 
or another adopted by quite a number of the leading 
offices, and are at present in use by one or two of them. 

This statute was found to be in some respects burden- 
some and unsatisfactory, and was superseded in 1880 by 
another law, which was slightly changed in the codifica- 
tion of 1887. The principal provisions of this law are as 
follows : 

That in case of default in payment after two or 
more full years' premiums shall have been received by 
the company, then the policy without further negotiation 
shall be binding for an amount of paid-up insurance, 
which shall be ascertained as follows : The net value of 
the policy upon Actuaries' Rate of Mortality, with 
interest at four per cent., shall be ascertained, and from 



CONCERNING NON-FORFEITABLE PLANS. 127 

it any indebtedness to the company shall be deducted. 
From this amount a surrender charge, to be ascertained 
as follows, shall be taken : Assuming the rate of mor- 
tality and interest from above '^the present value of 
all normal future death costs which by its terms the 
policy is exposed to pay in case of its continuance, 
shall be calculated, and eight per cent, of this sum shall 
be the legal surrender charge." The balance shall be 
the net single premium for life or endowment insurance 
maturing at the same time and in the same manner as 
provided in the original contract. If the policy properly 
relinquished is duly surrendered after two or more full 
years* premiums shall have been paid, it shall be 
entitled to receive a cash value which shall be the 
reserve, less the surrender charge already referred to, 
and any indebtedness to the company on account of 
such policy. 

The practical operation of this law upon an ordinary 
life policy for $1000, with equal annual premiums 
payable till death, would be as follows : 



Annual pre- 


Age 35. 


Age 40. 


Age 


:45. 


miums paid. 


Cash. 


Paid up. 


Cash. Paid up. 


Cash. 


Paid up. 


2 


$6 


$17 


$10 $25 


$15 


$33 


8 


18 


49 


25 62 


33 


72 


4 


31 


82 


41 98 


52 


111 


5 


44 


114 


57 133 


71 


148 


6 


57 


146 


74 168 


91 


184 


10 


115 


268 


90 201 


171 


318 


V^ 


195 


405 


107 237 


277 


462 



128 TALKS WITH LIFE INSURANCE AGENTS. 

This law was a great improvement upon the act of 
1 86 1 in that it did not apply to a policy until after two 
years* premiums had been paid and that it graduates 
surrender charges so that they grow less as the policy 
grows older. 

And here I would say a word about the insurance 
value. The definition I have already given is correct. 
I spoke in the last chapter about the costs of insurance, 
and told you how they were computed. Thus, at age 
fifty years, on a whole life policy for $1000, paid for by 
equal annual premiums till death, the costs of insurance 
were for the first eight years as follows: First year, 
$15.60; second year, $16.16; third year, $16.77 ; fourth 
year, $17.41; fifth year, $18.06; sixth year, $18.77; 
seventh year, $19.50; eighth year, $20.24. This series 
of values extends to the end of the Mortality Table, 
or till age ninety-nine. The present worth of this series 
is found by the yearly cost being discounted by the 
application of the interest factor and multiplied into 
the probability of the insured's being alive at the 
beginning of the year in which this cost occurs. 

In May, 1879, the Legislature of the State of New 
York passed a law which applies to policies upon which 
two full years' premiums shall have been paid. The net 
reserve on the American Experience Table of Mortality, 



CONCERNING NON-FORFEITABLE PLANS. 129 

with interest at four and one-half per cent., is the basis. 
Two-thirds of this reserve is taken after deducting any 
indebtedness and the balance " shall be applied, as shall 
have been agreed in the application and policy, to 
continue the insurance in force at the full amount so 
long as such single premiums will purchase temporary 
insurance for that amount at the age of insured at the 
date of lapse, or to purchase on the same life, at the 
same age, paid-up insurance, payable at the same time 
and under the same conditions, except as to the payment 
of premiums, as the original policy. Provided, that if no 
such agreement is expressed in the application and 
policy, the said smgle premiums may be applied in either 
of the modes specified at the option of the owner of the 
policy." The operation of this law may be specifically 
waived in the application, and the notice of such waiver 
must be written or printed in red ink on the margin 
of the policy. Full paid-up insurance, issued under this 
statute, does not participate in the profits of the 
company. Indeed, the application of the law is restricted 
by agreement largely to the issue of paid-up policies. 
Companies are forced to do this to prevent the insured 
from electing to have the full amount of the policy 
extended in case that his health becomes impaired. 
The table below illustrates the practical working of the 



130 TALKS WITH LIFE INSURANCE AGENTS. 

law upon a whole life policy for $1000, with equal 
annual premiums till death. The values given are the 
tmallest allowed by the terms of the act : 



Annual Premi- 


Paid-up Policy. 


Paid up Policy. 


Paid-up P 


ums Paid. 


Age 35. 


Age 40. 


Age4i 


3 


$64 


$73 


$82 


4 


86 


97 


108 


5 


107 


120 


133 


6 


128 


143 


159 


7 


148 


168 


182 


10 


308 


241 


249 


15 


299 


380 


855 



There is a law in the State of Maine in which three- 
fourths of the reserve, upon Actuaries' Rate of Mortality, 
with interest at four per cent., is taken. The whole 
amount of insurance is extended so long as this amount, 
less any outstanding indebtedness, will continue it as a 
net single premium. The company has the right, under 
the law, to deduct the forborne premiums with interest 
at seven per cent. 

There are now a large number of States in which 
there are non-forfeiture laws. I have, however, 
referred to the statutes which most materially aflfect the 
life insurance interests of the country. 

So far I have spoken largely of the legal provisions 
regulating the non-forfeiture of policies. As I stated 
in a preceding paragraph, whole life policies, where the 
payments were to be made in ten years, contained pro- 



CONCERNING NON-FORFEITABLE PLANS. 131 

vision for paid-up insurance for as many tenth parts of 
the original amount as there have been premiums paii 
This rule of proportional parts has been largely applied 
to all policies, whether life or endowment, where the 
payment of premiums was limited to a specific number. 
The surrender guarantee stipulates for the payment of 
at least two annual premiums. At the present time the 
amount of paid-up insurance to which the insured would 
be entitled is, in many offices, based upon the reserve 
less some specific surrender charge which is supposed 
to be sufficient to indemnify the company for the 
injury sustained by the loss of policy. In this matter 
each office, where the law does not intervene, has its 
own rule. The amounts given are, usually, fully as 
large as the companies can afford to give. 

So far as their legal effect is concerned, the non-forfeit- 
ure conditions should be considered in the light of the 
following rules: 

First, In case of a default in the payment of pre- 
miums, etc., the original policy (or, as it is expressed in 
the contract, this policy) becomes a paid-up policy, eta 
In such cases no surrender is required. In default in the 
payment of premium the insurance, either temporary for 
the full amount, or paid-up for the lesser amount, is con- 
tinued in force. 



132 TALKS WITH LIFE INSURANCE AGENTS. 

Second, In case of default in the payment of pre- 
miums, etc., the contract provides for the surrender of 
the policy within a limited time, usually either sixty or 
ninety days after such default, a paid-up policy will be 
issued, etc. It is essential that policies having this limi- 
tation as to time should be promptly surrendered, as 
they become lapses after the expiration of such limit. 

Third. Where the contract provides that in case of 
default in the payment of premiums when due, etc., upon 
surrender of the original policy a paid-up policy will be 
issued, etc., and when there is no statement as to the 
time in which such surrender shall be made, the policy 
must be given up to the company duly relinquished while 
it is actually in force. Otherwise the company may be 
relieved from the non-forfeiture obligations. 

In the second and third cases the assumption is that 
the policies contain the usual stipulation that in the event 
of the default in the payment of any premium upon the 
day on which it is due, the policy will be void and all 
premiums paid will be forfeited to the company. 

In times past, non-forfeiture conditions have been of 
many kinds. I will, by way of illustration, mention a few 
of those which are incorporated in outstanding policies. 

The main provisions of the statutes we have named. 

The right to a paid-up policy for an equitable amount. 



CONCERNING NON-FORFEITABLE PLANS. 133 

The right to a paid-up policy for an equitable amount, 
to be determined by the company. 

The right to a paid-up policy for the gross amount of 
premiums paid. 

The right to a paid-up policy for the gross amount of 
the premiums paid, less dividends. 

The right to the amount of the paid-up policy which 
the reserve will purchase as a net single premium. 

The right to the amount of paid-up insurance which 
the reserve will purchase as a single premium at the 
company's published rates. 

The right to the amount of paid-up insurance which 
may be endorsed upon the policy. 

The right in case of limited payment life and endow- 
ment policies for the amount of insurance which will be 
determined by the ratio which the ratio of the whole 
number of years' premiums paid bears to those which by 
the terms of the contract were to be paid, in order to 
secure the full amount named in policy at maturity. 

In order to secure a paid-up policy, at least two, and in 
some cases three, full years' premiums must be paid to the 
company. 

As a rule the companies deal with great fairness with 
their retiring policyholders. This has been brought 
about by the stress of a stiff competition for new busi- 



134 TALKS WITH LIFE INSURANCE AGENTS. 

ness, rather than by any legislation or legislative agitation. 
If there is a fault in the present methods it is in the 
desire to give too large values in paid-up insurance for 
policies on which there has been a default in the payment 
of premiums or which have been surrendered for any 
cause. It is possible to discriminate against those who 
have paid the longest number of years, and who have by 
reason of their superior vitality contributed the most to 
the common fund, in favor of the more recent comers. 

There are some things which should be remembered, 
and one of them is that no man can tell what the future 
experience of companies will be in respect to mortality, 
interest, lapses and expenses. In the absence of this 
knowledge it is impossible to determine what values in 
the way of paid-up insurance the company ought to 
give in justice to all interested. 

In respect to the endorsement of cash values upon 
the policy there is a wide difference of opinion 
among the officers of companies. The strongest argu- 
ment against the plan, in addition to the fact that there 
may be an unjust discrimination, as stated above, is that 
the company in stringent financial times may suffer loss 
by being compelled to dispose of securities at a time 
when all values are depreciated, in order to meet the 
demands of policy owners under these contracts. 



CONCERNING NON- FORFEITABLE PLANS. 135 

We would advise you to make yourself familiar with 
not only the practices of the company you represent in 
the particulars we have just named, but also in respect 
to those of the companies you may meet in the strife to 
secure new insurances. Cultivate conservative views 
upon this question. Remember that it is not by any 
means the foremost issue, although it is probably brought 
to the surface as often as any other. 



136 TALKS WITH LIFE INSURANCE AGENTS. 

XVIII. 

CONCERNING TONTINE DIVIDEND POLICIES. 

We have already called your attention to the sources 
from which the surplus in offices, conducted upon a 
purely mutual basis, is derived and the methods by 
which it is distributed where the plan of annual returns 
is used. As we intimated, there are some systems in 
which the apportionment of surplus is not made until the 
end of terms varying from five to twenty years. These 
formerly known as the Tontine Dividend and the 
Deferred Dividend plans are now generally called 
Accumulative Dividends. 

And here we would say that in the early history of life 
insurance the surplus was apportioned to the policy 
owners at the end of five or seven-year terms. That is 
to say, the first apportionment would be made and paid 
when the policy had been in force five years ; the second 
when it had been in force ten years, etc. In some 
offices the apportionment was made at the end of four 
years and annually thereafter. 

In 1863 The Mutual Life Insurance Company of 
New York introduced the contribution plan of dis- 
tributing surplus. In 1865 it decided to pay dividends 



CONCERNING TONTINE DIVIDEND POLICIES. 137 

at the end of the second and of every subsequent year. 
The other companies soon followed suit. Indeed, 
within five years nearly every American office was 
apportioning surplus at the end of one or two years. 
For a long time there had been a feeling that the 
ordinary life policy was faulty in that it compelled its 
owner to continue the payment of premiums after the 
need of insurance had ceased to exist. Various methods 
were suggested to meet this difficulty. For this pur- 
pose what is known as the Tontine Dividend form of 
insurance was introduced by several of the prominent 
offices. It is possible that the friends of this system 
urged its adoption to avoid the payment of annual 
dividends which, with the rapidly increasing cost of 
securing new insurances, had, under the system of net 
valuations, become burdensome to the older policy hold- 
ers. In any event the new plan was vigorously 
pushed, and very large volumes of insurance were 
issued upon it. 

The Tontine form of investment is more than two 
hundred and fifty years old. It was introduced into 
Europe in 1648 by Lorenzo Tonti, from whom it derived 
it name. In it the members created a fund by paying in 
certain stipulated sums, the amount of which was 
invested. The income was divided among the survivors. 



138 TALKS WITH LIFE INSURANCE AGENTS. 

When the last one died the fund reverted to the State, 
It is easy to see that as the members passed away the 
income to those who remained increased rapidly. The 
State, as the ultimate beneficiary of the original fund, 
could well afford to promote schemes of this sort. 

Another method was soon introduced. It was to 
improve the fund created by the members until they had 
been reduced by death to a certain number, among 
whom the fund was to be divided. Still another plan 
was to improve the fund for a certain number of years 
and then divide it up among the survivors. 

The Tontine element has in one form or another been 
for many years applied in the apportionment of the sur- 
plus of life insurance offices. This was the case when 
the five and seven-year periodic distributions, of which 
we have spoken, were made, as well as in the distributions 
which took place at the end of five years and annually 
thereafter. This could not well be otherwise at a time 
when the policy was forfeited upon the failure to pay a 
premium when due. 

The so-called Tontine Dividend plan is very simple. 
All policies issued upon it are placed in a class by them- 
selves. It is understood and agreed by its members that 
out of the premiums received by the company, all policies 
terminated by death within a stipulated period, usually 



CONCERNING TONTINE DIVIDEND POLICIES, 139 

either ten, fifteen or twenty years, shall be paid in full, 
and that the fund remaining shall be divided among those 
of the survivors who have kept their policies in force and 
observed all the other agreements and conditions con- 
tained in the contract of insurance. This fund will con- 
sist of two elements, viz., the reserve and the surplus. 
The following privileges were usually given to the pol- 
icy owner : To withdraw the surplus in cash or to use it 
to purchase either paid-up insurance or a life annuity, and 
in either case to continue the insurance in force upon the 
ordinary plan, until the normal maturity of the policy, 
receiving annual dividends and maintaining non-forfeiture 
conditions, or to withdraw the entire fund in cash, or to 
use it to purchase paid-up insurance or an annuity, as 
stated above. This implies a surrender of the policy and 
a termination of all existing relations thereunder. In 
case that the option to take paid-up insurance is selected, 
the amount cannot exceed that of the original policy 
unless the member to be insured is in good health. 

The fact that the form of policy was absolutely forfeit- 
able upon the failure to pay a premium, when due, 
in many cases entailed a hardship. This led to the 
adoption of the modification known as the Semi-Ton- 
tine Dividend plan, which differs from the form of 
contract just described, in that it concedes to its owner 



140 TALKS WITH LIFE INSURANCE AGENTS. 

the right to surrender the policy after three or more 
annual premiums have been paid to the company, and to 
receive in lieu such an amount of paid-up insurance as 
two-thirds of the net reserve upon the American Experi- 
ence Table of Mortality will purchase as a net single 
premium. To show the character of this form of con- 
tract I give below an illustration originally printed in 
Principles and Practice of Life Insurance, published by 
The Spectator Company, which is based upon the fol- 
lowing assumptions, viz.: Amount of policy, $1000 ; age 
of party, forty years; office premium, $31.30; interest 
on investments, five per cent ; rate of lapse, as stated in 
the second left hand column ; expenses, fifty per cent, 
of the first year's premiums, and twelve and one-half 
per cent, of the second and subsequent years' pre- 
miums. As nearly all offices base their reserves upon 
the Actuaries' Table of Mortality, with four per cent, 
interest, we have used this as the basis of surplus com- 
putation. 

A casual examination of this table shows that the 
depletion of the fund used to purchase paid-up policies 
is comparatively slight, being only $12,554, the balance 
of the accumulation being $110,980. The latter sum 
divided among policies in force at the end of ten years 
gives the share of each as $240.88, of which $162.97 is 



CONCERNING TONTINE DIVIDEND POLICIES. 



141 



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^ 


^ ^. 


53 


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s 


^ 


^ 


^ 


^ 


?. 


^ 


s 


CO 


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o 



s ^ 






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142 TALKS WITH LIFE INSURANCE AGENTS. 

reserve and $77.59 is surplus. The entire amount of 
premiums paid by each member was $313. 

It is claimed that this form of contract enhances the 
stability of the office, that it makes policyowners more 
persistent in premium paying, that it enables a man to 
protect his family during the money-earning period of 
his life, and then to withdraw his entire interest in the 
funds of the company, thus avoiding the payment of 
premiums in old age, when, perhaps, the effort to make 
such a payment might be burdensome. 

On the other hand it is urged that the absolute outlay 
under this form of insurance is larger than is necessary, 
and that the non-forfeiture provisions of policies now 
written enable their owners to withdraw without serious 
loss when the motive which led to the securing of the 
insurance has ceased to exist. 

There was for a number of years quite a discussion as 
to whether or not the surplus under the Tontine policies 
should be considered a liability against the company. 
There were arguments pro and con. The conclusion 
most generally adopted was that the amount of this 
fund should be reported to the Insurance Depart- 
ments, for the information of those who are the most 
immediately concerned, but that it should not be 
placed among the liabilities until it is apportioned among 



CONCERNING TONTINE DIVIDEND POLICIES. 143 

the members by the action of the trustees of the com- 
pany. 

The deferred dividend policies differ only in detail 
from the Tontine Dividend policies. Indeed, where the 
surplus is not returned until after a period of more than 
ten years, these forms of contract appear to be in touch 
with each other. Each of these forms of contract vary 
widely, not only in different offices, but also in different 
series in the same office. We have in this discussion 
confined ourselves to fundamental ideas and to the more 
general methods. You would do well to study the policy 
forms in use by various offices, and they are accessible, 
having been brought together by The Spectator Com- 
pany in its Handy Guide to Premium Rates, Applications 
and Policies. 



144 TALKS WITH LIFE INSURANCE AGENTS. 



XIX. 

CONCERNING INSURANCE FOR PROTECTION AND 
INSURANCE FOR INVESTMENT. 

When you approach a man for the purpose of solicit- 
ing his application, you must determine in your own 
mind as to what form of policy will best fit his needs. In 
this matter there are two points of view from which the 
question has been presented. Formerly life insurance 
was sought for protection only, latterly it has been 
in demand as a means of investment. Indeed, policies 
for large amounts are now secured by capitalists as 
much for the return they offer at some fixed future date 
as for the protection which they in the meantime afford 
to both their families and their business enterprises. 

There are two forms of contract which are valuable for 
the protection which they afford. One of these is the 
ordinary life policy with level premiums payable till 
death and with dividends which may be used for the 
reduction of premiums or for the purchase of additional 
paid-up insurance, which will be due at the maturity of the 
policy. The other of these contracts is the term policy, 
which should be made renewable without medical 



INSURANCE FOR PROTECTION AND INVESTMENT. 145 

examination. Where a man with a family has a limited 
income it is often desirable for him to secure the largest 
amount of insurance for a given outlay. He may have 
but little need for insurance after his family are able to 
support themselves. They will, I am sure, find the 
term policy the best adapted to their needs. Indeed, 
this form of insurance is gradually becoming better 
understood and more fully appreciated. It will undoubt- 
edly become a popular form of contract. 

The ordinary whole life policy, while a good contract 
for. protective purposes, was formerly open to some 
serious objection. The principal one is that the owner, 
in order to secure his estate against loss, is often obliged 
to continue the payment of premiums after the original 
motive which induced him to secure the insurance has 
ceased to exist. The contract to issue paid-up insurance 
which is now incorporated into nearly all policies has 
removed much of the force of this criticism. 

There is a form of insurance which is well adapted to 
the ordinary man. It is the endowment policy pay- 
able at death or on reaching the age of sixty-five or 
seventy years. The work of the average man is usually 
completed by the time he reaches the bourne of old age. 
After that time he has either withdrawn from business or 
has ceased to be as active as a wage-earner, whether by 



146 TALKS WITH LIFE INSURANCE AGENTS. 

the head or by the hand, and consequently his income 
falls off. Hence he should not undertake to carry 
financial burdens. The balance of his life should be as 
far as practicable eased by rest. The weight of the load 
should be placed on younger shoulders. It should be 
his aim through the whole of life to place himself in 
a position which will enable him to do this. He should 
find some means by which to hedge himself against the 
risks which are incident to all business ventures. If you 
took over the entire question as to how this can best be 
done you cannot find a better way than by securing an 
endowment policy payable at the period we have named. 
The more carefully you consider the matter the more 
apparent will it be that this is a safe course to adopt. 

To a young man this course presents peculiar ad- 
vantages. It costs but little more than an ordinary life 
policy. At age thirty the premium for a $10,000 en- 
dowment policy, payable at death or at age of sixty-five 
years, is $277.60, while the ordinary life policy costs 
$227. On these policies returns of surplus will be made 
which will largely reduce the cost. A man can thus 
secure his family in the event of his death and shield his 
old age from want. Furthermore, a very strong motive 
is furnished to save money to pay the premiums as 
they become due. A habit of thrift is thus created. 



INSURANCE FOR PROTECTION AND INVESTMENT. 147 

You will discover that many agents get into a rut. 
They present one form of insurance wherever they can. 
They dislike to work any other. The result is that they 
narrow their field of operations. This course is wrong 
and should be avoided. You should be familiar with 
the character and working of every form of policy and be 
able to select one which will enable you to make the 
strongest presentation possible to the man whom you 
would make your patron and friend at the same time. 
This makes it necessary to know something about your 
man before you approach him. 

Most agents find it to their advantage to present the 
investment form of insurance to men of large means. 
They seek large policies and large premiums. Further- 
more, it opens up all the field to them. If the richest 
men insure, they will have many followers. The poorer 
ones naturally fall into line and can readily be secured. 
If you would do your work clean and hold your business, 
you will find out the plan which is best suited to the 
needs of each of your patrons, and induce him to take 
it. If you give him a short-term endowment policy 
where a life, a term, or a long-term endowment insur- 
ance would be better for him, he will be no more satis- 
fied with you than he would with the tailor who sold 
him an ill-fitting coat. He will surrender his policy as 



148 TALKS WITH LIFE INSURANCE AGENTS. 

quickly as he can, secure a paid-up policy and more 
than likely become a sworn foe, not only to you but 
to the entire system of life insurance. This neither 
you nor those you represent can afford. 

We have called your attention to the sound judgment 
which it will be necessary for you to use in these 
matters. Be prudent and consider carefully as to 
the best form of insurance for you to present to 
the man whom you seek to insure, and the chances 
are that your patrons will be your friends and that 
the business will grow more profitable with each advanc- 
ing year. 

This chapter concludes the ^* Talks with Life Insurance 
Agents." It has been our purpose to give such infor- 
mation as may be helpful to the recently appointed field 
workers. To what extent we have succeeded we will 
leave our readers to judge. 



COMPOUND INTEREST TABLES. 



J49 



TABLE No. I. 
Compound Interest Table. Amount of One Dollar at the End 

OF ANY NlMBER OF YeARS L'P TO 50. 



< 


2 


252 


3 


' 'SH 


4 


4K 


6 


> 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent 


1 


1.0200 


1.0250 


1.0300 


i.asoo 


1.0400 


1.0450 


1.0500 


2 


1.0404 


1.0506 


1.0609 


1.0712 


1.0816 


1.0920 


1 1025 




1.0612 


1.0769 


1.0927 


1.1087 


1.1249 


1.1412 


1.1576 


4 


1.0824 


1.1038 


1.1255 


1.1475 


1.1699 


1.1925 


1.215f 


5 


1.1041 


1.1314 


1.1593 


1.1877 


1.2167 


1.2462 


1.276S 


Q 


1.1262 


1.1597 


1.1941 


1.2293 


1.2653 


1.3023 


1.3401 


7 


1.1487 


1.1887 


1.2299 


1.2723 


1.3159 


1.3609 


1.4071 


3 


1.1717 


1.2184 


1.2668 


1.3168 


1.3686 


1.4221 


1.4775 


9 


1.1951 


1.2489 


1.3048 


1.3629 


1.42a3 


1.4861 


1.5513 


10 


1.2190 


1.2801 


1.3439 


1.4106 


1.4S02 


1.5530 


1.6289 


11 


1.24a4 


1.3121 


1.3842 


1.4600 


1.5395 


1.6229 


1.7103 


12 


1.2682 


1.3449 


1.4258 


1.5111 


1.6010 


1.6959 


1.795S 


13 


1.2936 


1.3785 


1.4685 


1.5640 


1.6651 


1.7722 


1.8856 


14 


1.3195 


1.4130 


1.5126 


1.6187 


1.7317 


1.8519 


1.9799 




1.3459 


1.4483 


1.5580 


1.6753 


1.8009 


1.935:3 


2.0789 


16 


1.3728 


1.4S45 


1.6047 


l.TMO 


1.8730 


2.0224 


2.1829 


17 


1.4002 


1.5216 


1.6528 


1.7947 


1.9479 


2.1134 


2.2920 


18 


1.4282 


1.5597 


1.7024 


1.8575 


2.0258 


2.2085 


2.406i 


19 


1.4568 


1.5987 


1.7535 


1.9225 


2.1068 


2.3079 


2.5270 


20 


1.4859 


1.6386 


1.8061 


1.9898 


2.1911 


2.4117 


2.6o33 


21 


1.5157 


1.6796 


1.8603 


2.0594 


2.2788 


2.5202 


2.7860 


22 


1.5460 


1.7216 


1.9161 


2.1315 


2.3699 


2.6337 


2.92.53 


23 


1.5769 


1.7646 


19736 


2.2061 


2.4647 


2.7522 


3.0715 


24 


1.6084 


1.8087 


2.0328 


2.2833 


2 5633 


2.8760 


3.2251 


25 


1.6406 


1.8539 


2.0938 


2.3632 


2.6658 


3.0054 


3.3864 


26 


1.6734 


1.9003 


2.1566 


2.4460 


2.7725 


3.1407 


3.5557 


27 


1.7069 


1.9478 


2.2213 


2.5316 


2.88^ 


3.2820 


3.7335 


28 


1.7410 


1.9965 


2.2879 


2.6202 


2.9987 


3.4297 


3.9201 


29 


1.7758 


2.04^ 


2.3566 


2.7119 


3r87 


3.5840 


4.1161 


30 


1.8114 


2.0976 


2.4273 


2.8068 


3.24.34 


3.7453 


4.3219 


31 


1.8476 


2.1500 


2.5001 


2.9050 


3.3731 


3.9139 


4.5380 


32 


1.8845 


2.2038 


2.5751 


3.0067 


3.5081 


4.0900 


4.7649 


33 


1.9222 


2.2589 


2.6523 


31119 


3.6484 


4.2740 


5.0032 


34 


1.9607 


2.3153 


2.7319 


3.2209 


3.7943 


4.4664 


5.2533 


15 


1.9999 


2.3732 


2.8139 


3.3336 


3.9461 


4.6673 


5.5160 


36 


2.0399 


2.4325 


2.8983 


3.4503 


4.1039 


4.8774 


5.7918 


37 


2.08Or 


2.4933 


2.98.52 


3.5710 


4.2681 


5.0969 


6.0814 


38 


2.1223 


2.5557 


3.0748 


3.6960 


4.4388 


5.3262 


6.3855 


39 


2.1647 


2.6196 


3.1670 


3.8254 


4.6164 


5.5659 


6.7048 


40 


2.2080 


2.6851 


3.2620 


3.9593 


4.8010 


5.8164 


7.0400 


41 


2.2522 


2.7522 


3.3599 


4.0978 


4.9931 


6.0781 


7 3920 


42 


2.2973 


2.8210 


3.4607 


4.2413 


5.1928 


6.3516 


7.7616 


43 


2.^432 


2.8915 


3.5645 


4.3897 


5.4005 


6.6374 


8.1497 


fk 


2.3901 


2.9638 


3.6715 


4.5433 


5.6165 


6.9361 


8.5572 


45 


24379 


3.0379 


3.7816 


4.7024 


58412 


7.2482 


8.9850 


46 


2.4866 


3.1139 


3.8950 


4.8669 


6.0748 


7.5744 


9.4343 


47 


2.5363 


3.1917 


4.0119 


5.0373 


6.3178 


7.9153 


9.9060 


48 


2.5871 


3.2715 


4.1.323 


52136 


6.5705 


8.2715 


10.4013 


49 


2.6388 


3.3533 


4.2562 


5.3961 


6.83a3 


8.6437 


10.9213 


50 


2.6916 


3.4371 


4.3839 


5.5849 


7.1067 


9.0326 


11.4674 



150 



TALKS WITH LIFE INSURANCE AGENTS. 



TABLE No. II. 

Compound Interest Table. Amount of One Dollar per Annum for 
ANY Number of Years up to 50. 



% 


3 


3^ 


3 


3K 


4 


4K 


5 


>_ 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent 


1 


1.0200 


1.0250 


1.0300 


1.0350 


1.0400 


1.0450 


1.0500 


2 


2.0604 


2.0756 


2.0909 


2.1063 


2.1216 


2.1370 


21525 


3 


3.1216 


3.1525 


3.1836 


3.2149 


3.2465 


3.2782 


3.3101 


4 


4.2040 


4.2563 


4.3091 


4.3625 


4.4163 


4.4707 


4.5256 




5.3081 


5.3877 


5.4684 


5.5503 


5.6330 


5.7169 


5.8019 


Q 


6.4343 


6.5474 


6.6625 


6.7794 


6.8983 


7.0192 


7.1420 


Y 


7.5830 


7.7361 


7.8923 


8.0517 


8.2142 


8.3800 


8.5491 


3 


8.7546 


8.9545 


9.1591 


9.3685 


9.5828 


9.8021 


10.0266 


Q 


9.9497 


10.2034 


10.4639 


10.7314 


11.0061 


11.2883 


11.5779 


'. .0 


11.1687 


11.4835 


11.8078 


13.1420 


12.4864 


13.8412 


13.2068 


J 


13.4121 


13.7956 


13.1930 


13.6030 


14.0258 


14.4640 


14.9171 


2 


13.6803 


14.1404 


14.6178 


15.1130 


15.6268 


16.1599 


16.7130 


3 


14.9739 


15.5190 


16.0863 


16.6770 


17.2919 


17.9321 


18.5986 


A 


16.2934 


16.9319 


17.5989 


18.2957 


19.0236 


19.7841 


20.5786 


5 


17.6393 


18.3803 


19.1569 


19.9710 


30.8245 


31.7193 


22.6575 




19.0121 


19.8647 


20.7616 


21.7050 


33.6975 


23.7417 


24.8404 


.7 


20.4123 


21.3863 


32.4144 


23.4997 


34.6454 


35.8551 


27.1324 


g 


21.8406 


23.9460 


24.1169 


35.3672 


26.6713 


38.0636 


29.5390 


9 


23.2974 


24.5447 


25.8704 


27.2797 


28.7781 


30.3714 


32.0660 


i 


24.7833 


26.1833 


27.6765 


39.2695 


30.9693 


32.7831 


34.7193 


21 


26.2990 


27.8629 


29.5368 


31.3289 


33.2480 


35.3034 


37.5052 


< >o 


27.8450 


29.5844 


31.4529 


33.4604 


35.6179 


37.9370 


40.4305 




29.4219 


31.3490 


33.4265 


35.6665 


38.0826 


40.6892 


43.5020 


< '4 


31.0303 


33.1578 


85.4593 


37.9499 


40.6459 


43.5652 


46.7271 


iiS 


33.6709 


35.0117 


37.5530 


40.3131 


43.3117 


46.5706 


50.1135 


26 


34.3443 


36.9120 


39.7096 


42.7591 


46.0842 


49.7113 


53.6691 


27 


36.0513 


38.8598 


41.9309 


45.3906 


48.9676 


52.9933 


57.4026 


28 


37.7923 


40.8563 


44.2189 


47.9108 


51 Mm 


56.4230 


61.3227 


29 


39.5681 


43.9087 


46.5754 


50.6227 


55.0849 


60.0071 


65.4388 


80 


41.3794 


45.OOO0 


49.0027 


53.4295 


58.3283 


63.7524 


69.7608 


111 


43.2270 


47.1503 


51.5028 


56.3345 


61.7015 


67.6662 


74.2988 




45.1116 


49.3540 


54.0778 


59.3412 


65.2095 


71.7562 


79.0638 


33 


47.0338 


51.6129 


56.7303 


62.4532 


68.8579 


76.0303 


84.0670 


34 


48.9945 


53.9283 


59.4631 


65.6740 


72.6523 


80.4966 


89.3203 


35 


50.9944 


56.3014 


62.2759 


69.0076 


76.5983 


85.1640 


94.8363 


36 


53.0343 


58.7339 


65.1743 


72.4579 


80.7023 


90.0413 


100.6281 




55.1149 


61.2273 


68.1594 


76.0289 


84.9703 


95.1382 


106.7095 


38 


57.2373 


63.7830 


71.2342 


79.7249 


89.4091 


100.4644 


113.G950 


39 


59.4020 


66.4026 


74.4013 


83.5503 


94.0255 


106.0303 


119.7998 


40 


61.6100 


69.0876 


77.6633 


87.5095 


98.8265 


111.8467 


126.8398 


41 


63.8622 


71.8398 


81.0233 


91.6074 


103.8196 


117.9248 


134.2318 


42 


66.1595 


74.6608 


84.4839 


95.8486 


109.0124 


124.2764 


141.9933 


43 


68.5027 


77.5523 


88.0484 


100.2383 


114.4129 


130.9138 


150.14:^0 


44 


70.8927 


80.5161 


91.7199 


104.7817 


120.0294 


137.8500 


158.7002 


45 


73.3306 


83.5540 


95.5015 


109.4840 


125.8706 


145.0982 


167.6852 


46 


75.8172 


86.6679 


99.3965 


114.3510 


131.9454 


152.6726 


177.1194 


47 


78.3535 


89.8596 


103.4084 


119.3883 


138.2632 


160.5879 


187.0254 


48 


80,9406 


93.1311 


107.5406 


134.6018 


144.8337 


168.8594 


197.4267 


49 


83.5794 


96.4843 


111.7969 


129.9979 


151.6671 


177.5030 


208.3480 


60 


86.2710 


99.9215 


116.1808 


135.5828 


158.7738 


186.5357 


219.8154 



PRESENT VALUE OF ONE DOLLAR. 



151 



TABLE No. IIL 
Prkshnt Value of One Dollar for any Number of Years up to 50. 



i 


2 


2^ 


3 


Per Cent. 


4 


4K 


5 




Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent 


1 


.980392 


.975610 


.970874 


.966184 


.961538 


.956938 


.952381 




.961169 


.951814 


.942596 


.933511 


.924556 


.915730 


.90T029 


3 


.942322 


.928599 


.915142 


.901943 


.888996 


.876297 


.863838 


^ 


.923845 


.905951 


.888487 


.871442 


.854804 


.838561 


.822702 


5 


.905731 


.883854 


.862609 


.841973 


.821927 


.802451 


.783526 


6 


.887971 


.862297 


.837484 


.813501 


.790315 


.767896 


.746215 


7 


.870560 


.841265 


.813093 


.785971 


.759918 


.734828 


.710681 


8 


.853490 


.820746 


.789409 


.759412 


.730690 


.703185 


.676839 




.836755 


.800728 


.766417 


.733731 


.702587 


.672904 


.644609 


10 


.820348 


.781198 


.744094 


.708919 


.675564 


.643928 


.613913 


11 


.804263 


.762144 


.722421 


.684946 


.649581 


.616199 


.584679 


12 


.788493 


.743556 


.701380 


.661783 


.624597 


.589664 


.556837 


13 


.773033 


.725420 


.680951 


.639404 


.600574 


.564272 


.530321 


14 


.757875 


.707727 


.661118 


.617783 


.577475 


.539973 


.505068 


15 


.743015 


.690466 


.641862 


.596891 


.555264 


.516720 


.481017 


16 


.728446 


.673625 


.623167 


.576706 


.533908 


.494469 


.458112 


17 


.714163 


.657195 


.605016 


.557204 


.513373 


.473176 


.436297 


18 


.700159 


.641166 


.587395 


.538361 


.493628 


.452800 


.415521 




.686431 


.625528 


.570286 


.520156 


.474642 


.433302 


.395734 


20 


.672971 


.610271 


.553676 


.502566 


.456387 


.414643 


.376889 


21 


.659776 


.595386 


.537549 


.485571 


.438834 


.396787 


.358942 


22 


.646839 


.580864 


.521893 


.469151 


.421955 


.379701 


.341850 


23 


.634156 


.566697 


.506692 


.453286 


.405726 


.363350 


.825571 


24 


.621721 


.552875 


.491934 


.437957 


.390121 


.347703 


.310068 


25 


.609531 


.539391 


.477606 


.423147 


.375117 


.332731 


.295303 


26 


.597579 


.526234 


.463695 


.408838 


.360689 


.318402 


.281241 


27 


.585862 


.513400 


.450189 


.395012 


.346817 


.304691 


.267848 


28 


.574374 


.500878 


.437077 


.381654 


.333477 


.291571 


.255094 




.563112 


.488661 


.424346 


.368748 


.320651 


.279015 


.242946 


30 


.552071 


.476743 


.411987 


.356278 


.308319 


.267000 


.231377 


31 


.541246 


.465114 


.399987 


.344230 


.296460 


.255502 


.220359 


32 


.530633 


.453771 


.388337 


.aS2590 


.285058 


.244500 


.209866 


33 


.520229 


.442703 


.377026 


.321343 


.274094 


.233971 


.199873 


34 


.510028 


.431905 


.366045 


.bl0476 


.263552 


.223890 


.190355 


35 


.500028 


.421371 


.355383 


.299977 


.253415 


.214254 


.181290 


36 


.490223 


.411094 


.345032 


.289833 


.243669 


.2a5028 


.172657 


37 


.480611 


.401067 


.334983 


.280032 


.234297 


.196199 


.164436 




.471187 


.391284 


.325226 


.270562 


.225285 


.187750 


.156605 


39 


.461948 


.381741 


.315754 


.261413 


.216621 


.179665 


.149148 


40 


.452890 


.372431 


.306557 


.252572 


.208289 


.171929 


.142046 


41 


.444010 


.363347 


.297628 


.244032 


.200278 


.164525 


.135282 


42 


.435304 


.354484 


.288959 


.ii35779 


.192575 


.157440 


.128840 


43 


.426769 


.345839 


.280543 


.227805 


.185168 


.150661 


.122704 




.418401 


.337404 


.2r2372 


.220102 


.178046 


.144173 


.116861 


45 


.410197 


.329174 


.264439 


.212659 


.171198 


.137964 


.111297 


46 


.402154 


.321146 


.256737 


.205468 


.164614 


.132023 


.105997 


47 


.394268 


.313313 


.249259 


.198520 


.158283 


.126338 


.100949 


411 


.386538 


.305671 


.241999 


.191806 


.152195 


.120898 


.096142 


411 


.378958 


.298216 


.234950 


.185320 


.146341 


.115692 


.091564 


60 


.371528 


.290942 


.228107 


.179053 


.140713 


.110710 


.087204 



152 



TALKS WITH LIFE INSURANCE AGENTS. 



TABLE No. IV. 

Present Value of One Dollar per Annum for any Number op 
Years up to 50. 



a 
< 


2 


2% 


3 


3K 


4 


4K 


6 




Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent. 


Per Cent 


1 


.9804 


.9756 


.9709 


.9662 


.9615 


.9569 


.9524 


2 


1.9416 


1.9274 


1.9135 


1.8997 


1.8861 


1.8727 


1.8594 


3 


2.8839 


2.8560 


2.8286 


2.8016 


2.7751 


2.7490 


2.7232 


4 


3.S077 


3.7620 


3.7171 


3.6731 


3.6299 


3.5875 


3.5460 


5 


4.7135 


4.6458 


4.5797 


4.5151 


4.4518 


4.3900 


4.3295 


6 


5.6014 


5.5081 


5.4172 


5.3286 


5.2421 


5.1579 


5.0757 


7 


6.4720 


6.3494 


6.2303 


6.1145 


6.0021 


5.8927 


5.7864 


8 


7.3255 


7.1701 


7.0197 


6.8740 


6.7327 


6.5959 


6.4632 


9 


8.1622 


7.9709 


7.7861 


7.6077 


7.4353 


7.2688 


7.1078 


10 


8 9826 


8 7521 


8.5302 


8.3166 


8.1109 


7.9127 


7.7217 


11 


9.7868 


9.5142 


9.2526 


9.0016 


8.7605 


8.5289 


8.3064 


12 


10.5753 


10.2578 


9.9540 


9.6633 


9.3851 


9.1186 


8.8633 


13 


11.8484 


10.9832 


10.6350 


10.3027 


9.9856 


9.6829 


9.3936 


14 


12.1062 


11.6909 


11.2961 


10.9205 


10.5631 


10.2228 


9.8986 


15 


12.8493 


12.3814 


11.9379 


11.5174 


11.1184 


10.7395 


10.3797 


16 


13.5777 


13.0550 


12.5611 


12.0941 


11.6523 


11.2340 


10.8378 


17 


14.2919 


13.7122 


13.1661 


12.6513 


12.1657 


11.7072 


11.2741 


18 


14.9920 


14.3534 


13.7535 


13.1897 


12.6593 


12.1600 


11.6896 


19 


15.6785 


14.9789 


14.3238 


13.7098 


13.1339 


12.5933 


12.0853 


20 


16.3514 


15.5892 


14.8775 


14.2124 


13.5903 


13.0079 


12.4622 


21 


17.0112 


16.1845 


15.4150 


14.6980 


14.0292 


13.4047 


12.8212 


22 


17.6580 


16.7654 


15.9369 


15.1671 


14.4511 


13.7844 


13.1630 


23 


18.2922 


17.3321 


16.4436 


15.6204 


14.8568 


14.1478 


13.4886 


24 


18.9139 


17.8850 


16.9355 


16.0584 


15.2470 


14.4955 


13.7986 


25 


19.5235 


18,4244 


17.4131 


16.4815 


15.6221 


14.8282 


14.0939 


26 


20.1210 


18.9506 


17.8763 


16.8904 


15.9828 


15.1466 


14.3752 


27 


20.7069 


19.4640 


18.3270 


17 2854 


16.3S96 


15.4513 


14.6430 


28 


21.2813 


19.9649 


18.7641 


17.6670 


16.6631 


15.7429 


14.8981 


29 


21.8444 


20.4535 


19.1885 


18.0358 


16.9837 


16.0219 


15.1411 


80 


22.3965 


20.9303 


19.6004 


18.3920 


17.2920 


16.2889 


15.3725 


31 


22.9377 


21.3954 


20.0004 


18.7363 


17.5885 


16.5444 


15.5928 


32 


23.4683 


21.8492 


20.3888 


19.0689 


17.8736 


16.7889 


15.8027 


33 


23.9886 


22.2919 


20.7658 


19.3902 


18.1476 


17.0229 


16.0025 


34 


24.4986 


22.7238 


21.1318 


19.7007 


18.4112 


17.2468 


16.1929 


35 


24.9986 


23.1452 


21.4872 


20.0007 


18.6646 


17.4610 


16.374^ 


36 


25.4888 


23.5563 


21.8323 


20.2905 


18.9083 


17.6660 


16.5469 


37 


25.9695 


23.9573 


22.1672 


20.5705 


19.1426 


17.8622 


16.7113 


38 


26.4406 


24.3486 


22.4925 


20.8411 


19.3679 


18.0500 


16.8679 


39 


26.9026 


24.7303 


22.8082 


21.1025 


19.5845 


182297 


17.0170 


40 


27.3555 


25.1028 


23.1148 


21.3551 


19.7928 


18 4016 


17.1591 


41 


27.7995 


25.4661 


23.4124 


21.5991 


19.9931 


18.5661 


172944 


42 


28.2348 


25.8206 


23.7014 


21.8349 


20.1856 


18.7236 


17.4232 


43 


28.6616 


26.1664 


23.9819 


22.0627 


20.3708 


18.8742 


17.5459 


44 


29.0800 


26.5038 


24.2543 


22.2828 


20.5488 


19.0184 


17.6628 


45 


29.4902 


26.8330 


24.5187 


22.4955 


20.7200 


19.1563 


17.7741 


46 


29.8923 


27.1542 


24.7754 


22.7009 


20.8847 


19.2884 


17.8801 


47 


30.2866 


27.4675 


25.0247 


22.8994 


21.0429 


19.4147 


17.9810 


48 


30.6731 


27.7732 


25.2667 


23.0912 


21.1951 


19.5356 


18.0772 


49 


31.0521 


28.0714 


25.5017 


23.2766 


21.3415 


19.6513 


18.1687 


50 


31.4236 


28.3623 


25.7298 


23.4556 


21.4822 


19.7620 


18.2559 



actuaries' table of mortality. 



153 



TABLE No. V. 
Actuaries*, or Combined Experience Table of Mortality 





b« 


bi) 


-i 


*4-l 




to 


be 


ni . 


«M 




c 


c 


•^ M 


o 




a 


c 


-^ bfi 






> 


>> 


^•i 


c 




'> 


'>> 


i.s 





H 


•;3 


Q 


2q 


o . 


(!) 


*^ 


Q 




o , 
•5 V 


O 


u 


u 


PhJ^ 


^^ 


o 


}-> 


u 


iS^a 


< 




V 


^.'o 




< 




V 


iro 


S^ 




3 


S 

3 


15 


& 




6 

3 


B 

3 


S^ 


X 




;z; 


z 


> 


M 




;z; 


;zi 


> 


p<^ 


10 


100,000 


676 


.006760 


48.36 


55 


63,469 


1,375 


.021664 


16.86 


.1 


99,324 


674 


.006786 


47.68 


56 


62,094 


1,436 


.023126 


16.22 


2 


98,650 


672 


.006812 


47.01 


57 


60,658 


1,497 


.024679 


15.59 


.3 


97,978 


671 


.006848 


46.33 


58 


59,161 


1,561 


.026386 


14.97 


.4 


97,307 


671 


.006896 


45.64 


59 


57,600 


1,627 


.028247 


14.37 


5 


96,636 


671 


.006943 


44.96 


60 


55,973 


1,698 


.030336 


13.77 


6 


95,965 


672 


.007003 


44.27 


61 


54,275 


1,770 


.032612 


13.18 


:.7 


95,293 


673 


.007062 


43 58 


62 


52,505 


1,844 


.035120 


12.61 


8 


94,620 


675 


.007134 


42.88 


63 


50,661 


1,917 


.037840 


12.05 


19 


93,945 


677 


.007206 


42.19 


64 


48,744 


1,990 


.040826 


11.51 


20 


93,268 


680 


.007291 


41.49 


65 


46,754 


2,061 


.044082 


10.97 


21 


92,588 


683 


.007377 


40.79 


66 


44,693 


2,128 


.047614 


10.46 


22 


91,905 


686 


.007464 


40.09 


67 


42,565 


2,191 


.051474 


9.96 


23 


91,219 


690 


.007564 


39.39 


68 


40,374 


2,246 


.055630 


9.47 


24 


90,529 


694 


.007666 


38.68 


69 


38,128 


2,291 


.060087 


900 


25 


89,835 


698 


.007770 


37.98 


70 


35,837 


2,327 


.064933 


8.54 


26 


89,137 


703 


.007887 


37.27 


71 


33,610 


2,351 


.070158 


8.10 


27 


88,434 


708 


.008006, 


36.56 


72 


31,159 


2,362 


.075805 


7.67 


28 


87,726 


714 


.008139 


35.86 


73 


28,797 


2,358 


.081884 


7.26 


29 


87,012 


720 


.008275 


35.15 


74 


26,439 


2,339 


.088468 


6.86 


30 


86,292 


727 


.008425 


34.43 


75 


24,100 


2,303 


.095560 


6.48 


31 


85,565 


734 


.008578 


33.72 


76 


21,797 


2,249 


.103179 


6.11 


32 


84,831 


742 


.008747 


33.01 


77 


19,548 


2,179 


.111469 


5.76 


33 


84,089 


750 


.008919 


83.30 


78 


17,369 


2,092 


.120444 


5.42 


34 


83,339 


758 


.009095 


31.58 


79 


15,277 


1,987 


.130065 


5.09 


35 


82,581 


767 


.009288 


30.87 


80 


13,290 


1,866 


.140406 


4.78 


36 


81,814 


776 


.009485 


30.15 


81 


11,424 


1,730 


.151436 


4.48 


37 


81,038 


785 


.009687 


29.44 


82 


9,694 


1,582 


.163194 


4.18 


38 


80,253 


795 


.009906 


28.72 


83 


8,112 


1,427 


.175912 


3.90 


39 


79,458 


805 


.010131 


28.00 


84 


6,685 


1,268 


.189678 


3.63 


40 


78,653 


815 


.010362 


27.28 


85 


5,417 


1,111 


.205095 


3.36 


41 


77,838 


826 


.010612 


26.56 


86 


4,306 


958 


.222480 


3.10 


42 


77,012 


839 


.010894 


25.84 


87 


3,348 


811 


.242234 


2 84 


43 


76,173 


857 


.011251 


25.12 


88 


2,537 


673 


.265274 


2.59 


44 


75,316 


881 


.011697 


24.40 


89 


1,864 


545 


.292382 


2.35 


45 


74,435 


909 


.012212 


23.69 


90 


1,319 


427 


.323730 


2.11 


46 


73,526 


944 


.012839 


22.97 


91 


892 


322 


.360987 


1.89 


47 


72,582 


981 


.013516 


22.27 


92 


570 


231 


.405263 


1.67 


48 


71,601 


1,021 


.014260 


21.56 


93 


339 


155 


.457227 


1.47 


49 


70,580 


1,063 


.015061 


20.87 


94 


184 


95 


.516304 


1.28 


50 


69,517 


1,108 


.015939 


20.18 


95 


89 


52 


.584270 


1.12 


§i 


68,409 


1,156 


.016898 


19.50 


96 


37 


24 


.648649 


.99 


52 


67,253 


1,207 


.017947 


18.82 


97 


13 


9 


.692308 


.89 


53 


66,046 


1,261 


.019093 


18.16 


98 


4 


3 


.750000 


.75 


54 


64,785 


1,316 


.020313 


17.50 


99 


1 


1 


1.000000 


.50 



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